Put Spread on CMI on 4/5/2013

Cummins Inc. is a diesel engine manufacturer. The Company designs, manufactures, distributes and services diesel and natural gas engines, electric power generation systems and engine-related component products, including filtration, exhaust aftertreatment, fuel systems, fuel systems, controls systems, air handling systems and electric power. The Company sells its products to original equipment manufacturers (OEMs), distributors and other customers worldwide. It serves its customers through a network of more than 600 company owned and independent distributor locations and more than 6,500 dealer locations in more than 190 countries and territories. It has four segments: Engine, Power Generation, Components and Distribution. In April 2011, the Company sold its exhaust business to Global Tube. In July 2012, the Company acquired the emission control assets of Hilite International in Marktheidenfeld. The Hilite assets are part of Cummins Emission Solution (CES).

Stockwinners is bearish on this name for the following reasons: 

1. The stock is sitting at crucial levels. The 10-day MA just fell below the 50-day MA and the uptrend seems broken  .

Trade: Buy 1 May 110/105 Put spread for less than 1.50

Trade Buy 1 May $110.00 Put at $3.20 Sell 1 May $105.00 Put at $1.75 For a net debit of $1.45 Profit/Loss Analysis Breakeven at $108.55 Maximum profit is $355.00 at strike of $105.00 Maximum loss is ($145.00) at strike of $110.00 Closing Summary Sold 1 May $110.00 Put at $6.30 Bought 1 May $105.00 Put at $3.60

Position closed on 4/18/2013 at price of $2.70 with a 86.21% gain in 13 days.

Updates

4/18/2013 2:55:03 PM

Stockwinners is closing this position. We believe that it is time to take profits off the table on this name however, if you decide to stay on this trade, be sure to to adjust your stop-loss.

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