Option Traders Cocoon in Caterpillar's Downside Spread By Rebecca Darst About this article: Shares in Caterpillar are up about a percent today to $38.83, trending higher with a number of industrial commodity stocks on back of China's half-trillion-dollar stimulus package. One trader played against the share-price action in Caterpillar, seizing the opportunity afforded by lower put-side premiums by entering a 15,000-lot long put spread in the December contract using out-of-the-money strikes. The trader bought 35-strike puts for $1.53 per contract and sold 30-strike puts for $0.58, creating a 95-cent debit on a bearish position that breaks even for the trader at $34.05, or 12% below current levels. Capturing its greatest profitability, within the range of the lower spread strike and the break-even point, the trade pays out more than four times the money at risk, a range that could imply a challenge of Caterpillar's standing 52-week low of $32. Options on American depositary receipts of Harmony Gold are attracting... Or, call us at 1-866-321-TSCM (8726) Monday-Friday, 8 a.m.-6 p.m. ET. Outside the U.S. and in Canada, call 1-212-321-5200. More Stories From RealMoney Durable Goods Up Move Down the Tech Food Chain Jobless Claims Still High Bulls' Tenacity Is the Big Question Mark Should You Buy It? Pharmaceutical Product Development Bad News Trumps All Support for Banks Holds, For Now Bummer, Yields Are on the Rise Money on the Line Makes a Big Difference Structured Products: Unsafe at Any Price MORE STORIES FROM REALMONEY

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