Caterpillar On A Hot Day

The D.J.I.A. is up going into the noon hour.

Let's look at the Puts on Caterpillar at 9:43 a.m.

Look at Caterpillars five day chart. Up $30.00 in five days.

Question. Why didn't I talk about buying Calls on it five days ago? Two reasons. 1) It's earning report doesn't come out until February 3th and that's when a decision to predict which way the stock will go might tweak my interest. 2) Here is how Caterpillar traded on the day of it's last earning report and a comment then made by management.

Notice how flat the stock traded on the few days leading up the release date. That tells me that was about to happen was truly a puzzle. The new concern now might be that Trumph with his tariffs might might cause unexpected things to happen. In any event, here we are looking at the downside on thes Puts that expire in two days time. Now here is an update on these same Puts at 12:36 p.m.

The stock in the last 2.5 hours is down $1.44 and the bid and ask on these Puts are only up slightly. Notice how low their trading volume are. If we look one striking price lower we will notice the same thing.

It appears that day traders now at 12:50 p.m. are not thinking about an afternoon sell off. I note Tesla is also having a strong day to the upside and option traders are on Tesla are more proactive in their thinkings.

Let's see if buying two day out Puts on a Wednesday with a strong market opening is a good thing to do? It would be nice to see a profit by the end of the day. Now the final readings.

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If you bought the Puts this wasn't a pretty trade. Why is that? Well guessing the reversal in a strong stock is never an exact science. That plus the markets stayed strong until near the end of the day. The bottom line is that you can play mid week reversals on strong stocks for a one day play and make money in doing it.