Caterpillar (CAT) Offering Possible 14.94% Return Over the Next 6 Calendar Days

Caterpillar's most recent trend suggests a bullish bias. One trading opportunity on Caterpillar is a Bull Put Spread using a strike $165.00 short put and a strike $160.00 long put offers a potential 14.94% return on risk over the next 6 calendar days. Maximum profit would be generated if the Bull Put Spread were to expire worthless, which would occur if the stock were above $165.00 by expiration. The full premium credit of $0.65 would be kept by the premium seller. The risk of $4.35 would be incurred if the stock dropped below the $160.00 long put strike price.

The 5-day moving average is moving up which suggests that the short-term momentum for Caterpillar is bullish and the probability of a rise in share price is higher if the stock starts trending.

The 20-day moving average is moving up which suggests that the medium-term momentum for Caterpillar is bullish.

The RSI indicator is at 50.38 level which suggests that the stock is neither overbought nor oversold at this time.

To learn how to execute such a strategy while accounting for risk and reward in the context of smart portfolio management, and see how to trade live with a successful professional trader, view more here

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Analyzing Caterpillar's Unusual Options Activity
Mon, 09 Nov 2020 14:42:31 +0000
On Monday, shares of Caterpillar (NYSE: CAT) saw unusual options activity. After the option alert, the stock price moved down to $161.38. * Sentiment: BULLISH * Option Type: SWEEP * Trade Type: CALL * Expiration Date: 2020-11-13 * Strike Price: $180.00 * Volume: 29 * Open Interest: 135Three Indications Of Unusual Options Activity One way options market activity can be considered unusual is when volume is exceptionally higher than its historical average. The volume of options activity refers to the number of contracts traded over a given time period. The number of unsettled contracts that have been traded, but not yet closed, is called open interest. These contracts are not yet closed because a buyer has not purchased the contract, or a seller has not sold it.The trading of a contract with an expiration date in the distant future is another sign of unusual activity. Generally, additional time until a contract expires increases the potential for it to reach its strike price and grow its time value. Time value is important in this context because it represents the difference between the strike price and the value of the underlying asset.Contracts with a strike price far from the underlying price are also considered unusual because they are defined as being “out of the money”. This occurs when the underlying price is under the strike price on a call option, or above the strike price on a put option. These trades are made because the underlying asset value is expected to change dramatically in the future, and the buyer or seller can take advantage of a greater profit margin.Understanding Sentiment Options are “bullish” when a call is purchased at/near ask price or a put is sold at/near bid price. Options are “bearish” when a call is sold at/near bid price or a put is bought at/near ask price.These observations are made without knowing the investor's true intent by purchasing these options contracts. The activity is suggestive of these strategies, but an observer cannot be sure if a bettor is playing the contract outright or if the options bettor is hedging a large underlying position in common stock. For the latter case, bullish options activity may be less meaningful than the exposure a large investor has on their short position in common stock.Using These Strategies To Trade Options Unusual options activity is an advantageous strategy that may greatly reward an investor if they are highly skilled, but for the less experienced trader, it should remain as another tool to make an educated investment decision while taking other observations into account.For more information to understand options alerts, visit https://pro.benzinga.help/en/articles/1769505-how-do-i-understand-options-alertsSee more from Benzinga * Click here for options trades from Benzinga * Analyzing Caterpillar's Unusual Options Activity * Recap: Caterpillar Q3 Earnings(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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