On Friday’s CNBC’s Options Action, the crew analyzed Caterpillar’s recent strong performance despite falling earnings and revenues. Caterpillar is currently trading near its peak valuation, while revenues have fallen nearly 40%. Moreover, earnings has fallen almost 60-70% from its peak, suggesting that Caterpillar is currently trading at a substantial premium. Expecting this stock to move lower over the next month, Michael Khouw suggested buying a Jan 93/89/85 Put Christmas Tree for a $0.90 Debit.
We’ve structured this trade in OptionsPlay so you can analyze and view this trade along with the supporting technical chart at your convenience. You can also view the Options Action’s video by clicking on the following link: CNBC Options Action