Caterpillar Inc. (CAT) Trader Gambles On Another Strong Week

One Caterpillar Inc. trader rolled her bullish bet up and out

Karee Venema

Oct 27, 2014 at 10:06 AM

Caterpillar Inc. (NYSE:CAT) added nearly 5% last week, thanks to a strong showing in the earnings confessional. Against this backdrop, one option speculator on Friday readjusted her long call position to gamble on additional upside for CAT in the near term.

Specifically, a sweep of 1,750 weekly 10/31 102-strike calls was bought to open in afternoon trading. This lot traded simultaneously with a symmetrical block of weekly 10/24 98-strike calls, which were set to expire at last Friday's close. In other words, it appears this trader may have rolled her bullish bet up and out one week, expecting the stock to rally past $102 by this Friday's close, when the weekly 10/31 series expires.

From a wider sentiment perspective, option traders have taken the bearish route toward an equity that's tacked on 7.7% in 2014 to trade at $97.78. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for example, the stock's 50-day put/call volume ratio of 2.08 ranks in the 97th annual percentile. Echoing this skepticism outside of the options pits is Raymond James, which cut its price target for Caterpillar Inc. (NYSE:CAT) to $105 from $110 this morning, while underscoring its "market perform" rating.

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