The automated Quantcha Trade Ideas Service has detected a promising Bull Put Spread trade opportunity for CATERPILLAR (CAT) for the 21-Jul-2017 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
CAT was recently trading at $106.17 and has an implied volatility of 18.56% for this period. Based on an analysis of the options available for CAT expiring on 21-Jul-2017, there is a 34.14% likelihood that the underlying will close within the analyzed range of $105.80-$113.69 at expiration. In this scenario, the average linear return for the trade would be 57.24%.
52 week high: CATERPILLAR recently reached a new 52-week high at $106.21. CAT had traded in the range $70.53-$105.98 over the past year.
Trade approach: Reaching a new 52-week high is a bullish indicator, so this trade is designed to be profitable if CAT maintains its current direction and does not revert back to pricing on the bearish side of $106.17 on 21-Jul-2017. If possible, the trade has been padded such that slight movement against the trade would still return a profit.
Upside potential: Using this bullish strategy, the trade would be profitable if CATERPILLAR closes at or above $105.53 on 21-Jul-2017. Based on our risk-neutral analysis, there is a 51.43% likelihood of this return.
Downside risk: As with any options trade, there is a substantial downside risk where you may lose most or all of your investment.
To analyze this trade in depth, please visit the Quantcha Options Search Engine.
This is an automated post generated based on a market analysis of delayed data at 6/1/2017 10:49:34 AM ET. The analysis does not include brokerage fees or commissions and is not investment advice.