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Quantchabot has detected a promising Bull Put Spread trade opportunity for CATERPILLAR (CAT) for the 15-Jan-2021 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.

CAT was recently trading at $174.00 and has an implied volatility of 29.48% for this period. Based on an analysis of the options available for CAT expiring on 15-Jan-2021, there is a 34.13% likelihood that the underlying will close within the analyzed range of $174.04-$197.52 at expiration. In this scenario, the average linear return for the trade would be 77.49%.

Big 7.88% Change: After closing the last trading session at $161.29, CATERPILLAR opened today at $174.03 and has reached a high of $176.37.

Trade approach: A movement as big as 7.88% is a significantly bullish indicator, so this trade is designed to be profitable if CAT maintains its current direction and does not revert back to pricing on the bearish side of $174.00 on 15-Jan-2021. If possible, the trade has been padded such that slight movement against the trade would still return a profit.

Upside potential: Using this bullish strategy, the trade would be profitable if CATERPILLAR closes at or above $172.80 on 15-Jan-2021. Based on our risk-neutral analysis, there is a 52.25% likelihood of this return.

Downside risk: As with any options trade, there is a substantial downside risk where you may lose most or all of your investment.

To analyze this trade in depth, please visit the Quantcha Options Search Engine.