Put Spread on CAT on 10/2/2014

Caterpillar Inc. (CAT) manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives worldwide.

The company’s Construction Industries segment offers construction machines and related parts, including backhoe, small wheel, skid steer, multi-terrain, medium wheel, compact track, compact wheel, and track-type loaders; mini excavators and wheel excavators, as well as small, medium, and large track excavators; small track-type and medium track-type tractors; and select work tools, motor graders, and pipelayers for the heavy construction, general construction, mining and quarry, and aggregates markets.

Its Resource Industries segment provides electric rope and hydraulic shovels; draglines; drills; highwall and longwall miners; hard rock vehicles; large track-type tractors; articulated, large mining, and off-highway trucks; large wheel loaders; wheel tractor scrapers; wheel dozers; machinery components; and electronics and control systems for mine, quarry, forestry, paving, tunneling, waste, and industrial customers.

Shares of this Dow Component, have fallen through a key support level. Slowing Chinese economy has hurt CAT as China is a major market for Caterpillar. The $90 level appears to be a solid support for the stock. 

52-Week Trading Range: $81.87 - $111.46

Last Trade: $97.61.

Here is the trade:

Trade Buy 1 November $97.50 Put at $3.40 Sell 1 November $92.50 Put at $1.65 For a net debit of $1.75 Profit/Loss Analysis Breakeven at $95.75 Maximum profit is $325.00 at strike of $92.00 Maximum loss is ($175.00) at strike of $98.00 Closing Summary Sold 1 November $97.50 Put at $5.70 Bought 1 November $92.50 Put at $2.70

Position closed on 10/9/2014 at price of $3.00 with a 71.43% gain in 7 days.

Updates

10/9/2014 1:15:27 PM

We are taking profits on CAT put spread. 

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