[Options] Does the Big Cat Have Any Fight In It?
As you can see, the stock is basically at a "do or die" level.
Tune in to me and JC chatting about what we like about this setup, why we're willing to bet on this level holding, and why we chose to keep this trade simple at 3 pm ET at this link. It'll be archived afterward if you don't catch it live, so no worries about stopping by later.
Here's the Play:
I like buying $CAT November 240 calls for approximately $7.50 per contract. These calls currently offer a nearly 30 delta and will offer us nice leverage if the move we're looking for develops.
This debit we pay is the most we can lose. But we'll look to exit the trade if $CAT losses the $200 level. Any closing price below $200 tells me I'm wrong and I'll want out.
In the meantime, if JC's thesis plays out, I'll look for an opportunity to sell half of my calls at double the value I pay today to take all of my original risk capital out of the trade. So I'll be leaving a resting good-til-canceled (GTC) limit order to sell half of my calls for $15.00 per contract. If I get that fill, then I'll be #FreeRiding on the rest into November, while still honoring the $200 stop loss level.
Once we get into November, I'll either then exit what's left of the position if my calls are out-of-the-money (meaning $CAT is below our 240 strike price) to salvage whatever is left of the premium (if anything), or I'll then follow a tight trailing stop at a 3-5 day low as we head into expiration.
If you have any questions on this trade, please send them here.
ASO subscribers who missed last week’s video Jam Session where we reviewed activity in our options portfolio from the past week can catch it here.
P.S. We do trades like this regularly. If you'd like to leverage Best-in-Class technical analysis into smarter directional options trades, try out All Star Options Risk Free! Or give us a call to learn more: 323-421-7991.