Caterpillar trade bets on higher volatility

optionMONSTER

A large trader is looking for higher volatility in Caterpillar.

optionMONSTER's Depth Charge system shows that a trader bought 3,000 January 60 puts for the ask price of $1.50. The volume was twice the strike's open interest before the session began, clearly showing that this is a new position.

Less than a minute later, a block of 30,000 CAT shares was purchased for $89. The delta of the options was -0.1, so this would make the overall position market-neutral and thereby focused on volatility rather than the stock's direction. (See our Education section)

CAT is up fractionally today at $89.19. The construction-equipment giant gapped higher on the first day of the year and tested resistance just below $100 at the start of February, but it has been falling since.

More than 24,500 CAT options have already changed hands today, compared with a full-session average of 15,440 in the last month.

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