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Trader remains nervous on Caterpillar

David Russell (david.russell@optionmonster.com)

Caterpillar has been trying to advance, but one investor remains nervous.

optionMONSTER's Depth Charge tracking program detected the purchase of 11,945 January 85 puts for $1.23 and the sale of an equal number of January 95 calls for $0.46. Volume exceeded open interest at both strikes, indicating that new positions were initiated in each.

The investor paid $0.77 to open the trade and will make money if the maker of earth-moving equipment declines over the next five weeks. He or she probably owns shares in the company and is using the options as a hedge in a collar strategy .

CAT is trading at $89.17, up 0.19 percent today and 9 percent in the last month. The stock has been consolidating since the spring and is now back near the top of its recent range, which could be leading some chart watchers to expect that it will struggle to advance in the near term.

Total option volume is almost twice the daily average in the stock so far today.

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