A Buy-Write Strategy For Caterpillar (CAT)

CNBC's Options Action Scott Nations recommended an interesting buy-write strategy to investors who own Caterpillar (NYSE: CAT).

He recommends selling February 57.5 call options for $1.30. If the stock moves sideways investor would keep $1.30, which is 2.5% of CAT's value. The nvestor also keeps the premium if Caterpillar (CAT) continues its decline. If the stock rallies, the investor would get called at $57.5 and sell the CAT at higher price. Together with teh premium that would bring 8% of profits.

Caterpillar (CAT) fell 4.57% on Friday and closed at $54.25.