The automated Quantcha Trade Ideas Service has detected a promising Long Iron Condor trade opportunity for CATERPILLAR (CAT) for the 17-Nov-2017 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
CAT was recently trading at $104.42 and has an implied volatility of 20.21% for this period. Based on an analysis of the options available for CAT expiring on 17-Nov-2017, there is a 49.54% likelihood that the underlying will close within the analyzed range of $91.76-$112.16 at expiration. In this scenario, the average linear return for the trade would be 72.22%.
Price target: Zacks Research has updated their six-month price target for CAT to $101.96. This price target is a consensus price created from the price targets published by 13 participating analysts whose targets ranged from $60.00 to $121.50.
Mean recommendation: Zacks normalizes analyst recommendations to a 1-5 scale where 1 indicates a strong buy. Their mean recommendation for CAT has been updated to 2.38, which indicates a buy consensus from analysts. Sentiment has moved from 2.50 to 2.50 to 2.50 over the past three months.
Trade approach: The difference between the current price for CAT and the mean price target is $5.58, which represents a 2.35% move (4.83% annualized). Since the 180-day implied volatility for CAT is 22.08%, a neutral range-bound strategy could prove effective if the price target ultimately turns out to be accurate.
Upside potential: Using this neutral range-bound strategy, the trade would be profitable if CATERPILLAR closed in the range $90.34-$112.16 on 17-Nov-2017. Based on our analysis, there is a 52.41% likelihood of this return. The maximum return for this trade would be 76.06% if CATERPILLAR closed in the range $92.50-$110.00.
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 6/7/2017 10:29:36 AM ET. The analysis does not include brokerage fees or commissions and is not investment advice.