Carter Worth And Mike Khouw's Caterpillar Inc. Trade

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On CNBC's Options Action
, Carter Worth spoke about correlation between crude oil and
Caterpillar Inc.CAT
. He showed on a chart that they were correlated in the past, but recently the move lower in crude oil was sharper than the move in
Caterpillar Inc.
. Worth believes that
Caterpillar Inc.
can't withstand the pressure from crude oil and it is going to decline to $75 or to $67, which was the low of 2011. Mike Khouw can't see how
Caterpillar Inc.
can impress investors on January 27, when it reports earnings. He added that options are not very expensive going into the event and he wants to buy short dated options to make a bearish bet. Khouw wants to buy the February 86 puts for $2.10. The break even for this trade is at $83.90 or 2 percent lower from the current market price.
Posted In: CNBCMediaMike KhouwOptions Action
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