On CNBC's Options Action, Mike Khouw spoke about options activity in Caterpillar Inc. CAT. He said that the options volume was 4 times higher than the average daily options volume and he noticed that traders were making some bearish bets.
They were buying the July 75 puts for $0.40. For the trade to be profitable Caterpillar Inc. has to drop to $74.60 or 3 percent lower by next Friday.
Khouw thinks that this is an inexpensive way to make a bearish bet as he believes that Caterpillar Inc. could easily decline 3 percent in such a short period.
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