Plowing Through Deere's Chart

Deere & Co. (DE) is one of those names that for some reason I think is a big mover post-earnings, until I actually look at the numbers. I guess I'm mixing it up with Caterpillar (CAT). I see a 2.8% move priced into shares and I think that has to be wrong, but then I look at the past moves. DE has opened 0.60% or less from the previous day's close two of the past three times. The other time, it was a whopping 3% move. In fact, after the last three reports, Deere's price has not gotten more than 3.3% away from the previous day's closing price. The straddles were priced much higher all three times as well.

Deere's chart (below) shows a nice trading channel that has to be a major influence on this pricing. Resistance at $95 and support at $92.50 doesn't give the stock much room to move. Momentum is waning as well, which is a shame because there is no resistance above $95. A move to $100 would likely come very, very quickly. I can see why the options are priced with a low expected move. Still it is tough for me to see yet another flat close, but straddles have failed three straight times, so I'll turn to ratio spreads or butterflies....120 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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