Quantchabot has detected a promising Bear Call Spread trade opportunity for CATERPILLAR (CAT) for the 21-Oct-2022 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
CAT was recently trading at $164.82 and has an implied volatility of 39.29% for this period. Based on an analysis of the options available for CAT expiring on 21-Oct-2022, there is a 34.21% likelihood that the underlying will close within the analyzed range of $147.95-$165.18 at expiration. In this scenario, the average linear return for the trade would be 29.83%.
52 week low: CATERPILLAR recently reached a new 52-week low at $164.51. CAT had traded in the range $167.08-$237.90 over the past year.
Trade approach: Reaching a new 52-week low is a bearish indicator, so this trade is designed to be profitable if CAT maintains its current direction and does not revert back to pricing on the bullish side of $164.82 on 21-Oct-2022. If possible, the trade has been padded such that slight movement against the trade would still return a profit.
Upside potential: Using this bearish strategy, the trade would be profitable if CATERPILLAR closes at or below $165.26 on 21-Oct-2022. Based on our risk-neutral analysis, there is a 50.18% 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.