Dan Nathan's Caterpillar (CAT) Trade
Dan Nathan of CNBC's Options Action, recommended on the show a stock replacement strategy in Caterpillar Inc. (NYSE: CAT). He said that Caterpillar (CAT) is a big global growth play, and the stock is currently outperforming.
Mr. Nathan added that Caterpillar's (CAT) chart looks great, and it seems like CAT is going to break out. He thinks that investors that are long Caterpillar Inc. (CAT) should sell the shares and look at options.
Dan Nathan suggested investors sell the November 60 put for $2.35 and the November 75 call for $2.80. They can use the proceeds to buy the November 70 call for $5.00.
Dan Nathan is looking at November expiration because Caterpillar Inc. (CAT) will report earnings in that month. CAT gave a great guidance and that would be a next catalyst for this stock, thinks Dan Nathan.
Caterpillar Inc. (CAT) gained 1.93% on Friday, and it closed at $69.31.
