Traders Bet On More Caterpillar Stock Downside

Some could be eyeing a move below $130 for Caterpillar

Sep 4, 2018 at 1:21 PM
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Last week we covered the technical difficulties for Dow component Caterpillar Inc. (NYSE:CAT). The stock is trading down again today, last seen 1.3% lower at $137.07, and it would seem a number of traders are wagering on more losses going forward. For instance, put volume is accelerated today, and the most popular option is the October 130 put. Data suggests mostly buy-to-open activity here, which would mean speculators expect CAT to fall below $130 in the weeks ahead.

Looking back, the equity posted a notable bottom right near this price point back on Aug. 15. Moreover, the $130 mark represents a 25% discount from Caterpillar's all-time high of $173.24.

It's also worth pointing out that put buying is far from the norm in CAT's 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 1.67, which ranks in the 91st annual percentile, revealing a long-time penchant for heavy call buying.

cat stock price

Today's options traders aren't the only ones foreseeing more troubles ahead for Caterpillar, however. About one month ago short interest on the stock hit the lowest point in more than a decade, but in the reporting period that followed the number of shares sold short exploded by 95%, jumping from 6.11 million shares to 11.92 million. If this trend continues, it'll make it harder for the security to gain traction on the charts -- especially if it's coupled with another round of trade blows between the U.S. and China.



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