Best Stock on the Market

Put Options on CAT on 2/2/2015

Bearish Flag on CATCaterpillar 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.

The company’s Power Systems segment offers reciprocating engine powered generator sets; integrated systems for the electric power generation industry; reciprocating engines, and integrated systems and solutions; turbines and turbine-related services; and diesel-electric locomotives and components, and rail-related products and services. Its Financial Products segment provides retail and wholesale financing alternatives for Caterpillar equipment, machinery, and engines; offers property, casualty, life, accident, and health insurance, as well as insurance brokerage services; and purchases short-term receivables.

Shares have formed a bearish "flag" after the firm warned of lower earnings due to lower oil prices. Lower prices are expected for this stock.

52-Week Trading Range: $78.81 - $111.46

Last Trade: $80.33

Trade

  • Buy 1 March $80.00 Put at $2.70
  • For a net debit of $2.70

Profit/Loss Analysis

  • Breakeven at $77.30
  • Maximum profit is unbounded
  • Maximum loss is ($270.00) at strike of $80.00

Closing Summary

  • Sold 1 March $80.00 Put at $0.00

Position closed on 3/21/2015 at price of $0.00 with a -100.00% loss in 46 days.

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