Why Options Bulls Should Target Caterpillar Stock

CAT recently brushed off a bear note from Citigroup

Aug 11, 2021 at 12:02 PM
facebook twitter linkedin


Blue-chip bellwether Caterpillar Inc. (NYSE:CAT) is pulling back to its 200-day moving average, which has acted as support for the equity in the past. Plus, the stock boasts a 55% year-over-year lead, and is up 14% in 2021, making now the perfect time to buy calls.
 
There’s plenty of room for upgrades, too. Of the 15 in coverage, only five call CAT a "strong buy," while nine say "hold" and one says "sell."
 
The stock also overcame a substantial rise in short interest, which tacked on 38% in the past six months, while CAT added 8%, a sign of underlying strength in the equity. What’s more, the security managed to quickly brush off a downgrade from Citigroup to "neutral" from "buy" earlier in the year.
 
Caterpillar calls can be had for a relative bargain right now. This is per the security’s Schaeffer’s Volatility Index (SVI) of 24%, which stands higher than just 13% of readings from the past year, suggesting options traders are pricing in low volatility expectations at the moment. Even better, the stock’s Schaeffer’s Volatility Scorecard (SVS) ranks at 70 out of a possible 100. This implies CAT has exceeded these volatility expectations – a boon for buyers.
 
Subscribers to Schaeffer's Weekend Trader options recommendation service received this CAT commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.
 

Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 

 

300x250 - Banner 3 - v1