Caterpillar Stock Trails 2-Year High Ahead of Earnings

The equity has tacked on over 47% since the broader market's mid-March selloff

Assistant Editor
Oct 23, 2020 at 2:27 PM
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Heavy machinery concern Caterpillar Inc. (NYSE:CAT) is down 0.8% at $168.50, though still just shy of its two-time high, as the company prepares to release earnings next week. Specifically, Caterpillar is slated to report third-quarter earnings before the open on Tuesday, Oct. 27. Below, we will take a look at how CAT stock has been faring on the charts ahead of the release, as well as its earnings history ahead of the event.

Caterpillar stock has thrived since bottoming out to a nearly four-year low of $87.50. In fact, the equity has tacked on 47.2% over the last six months, leading right up to its Oct. 20multi-year high of $171.26. Meanwhile, CAT's 50-day moving average has acted as a layer of support that's captured pullbacks since mid-May. Longer term, the security boasts a 13.5% lead for 2020.

CAT Chart October 23

In the options pits, data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows a 50-day call/put volume ratio of 2.45, ranking in the 84th percentile of its annual range. This suggests long calls have been bought over puts at a faster-than-usual clip during the past two weeks.

Now looks to be an affordable time to jump on the options bandwagon, too. Caterpillar stock's Schaeffer's Volatility Index (SVI) of 38% sits in the 29th percentile of all other readings from the past year -- a boon for premium buyers.

Digging into its earnings history, CAT stock has closed lower the day after six of the company's last eight earnings reports. On average, the shares have seen a post-earnings move of 3.9% over this two-year time frame, regardless of direction. This time around, near-term straddle data per Trade-Alert is suggesting a 4.4% move for Wednesday's trading.

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