Caterpillar receives vote of confidence
At least one investor is betting that downside potential is limited in Caterpillar.
optionMONSTER's market scanners detected the sale of 2,500 July 72.50 puts in one print for $0.70 today. Volume surpassed the strike's open interest of 1,709 contracts, showing that this is a new position.
Short puts lock in a price where investors must buy a stock, while letting them collect premium. Traders use the technique when they like a stock and think that the risk of a big drop is limited. (See our Education section)
CAT is down 1.51 percent to $76.93 in morning trading but is up 10 percent in the last month. The construction-equipment manufacturer giant is expected to announce quarterly results in the pre-market on July 26.
Overall option volume is about average in CAT so far today.
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