This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Interesting July Stock Options For Caterpillar

CAT+Dividend+History+Chart

Turning to the other side of the option chain, we highlight one call contract of particular interest for the July expiration, for shareholders of Caterpillar Inc. (CAT) looking to boost their income beyond the stock's 2.3% annualized dividend yield. Selling the covered call at the $104 strike and collecting the premium based on the $1.79 bid, annualizes to an additional 16.2% rate of return against the current stock price (this is what we at Stock Options Channel refer to as the YieldBoost), for a total of 18.5% annualized rate in the scenario where the stock is not called away. Any upside above $104 would be lost if the stock rises there and is called away, but CAT shares would have to advance 0.7% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 2.4% return from this trading level, in addition to any dividends collected before the stock was called.

START SLIDESHOW:
Top YieldBoost CAT Calls »

The chart below shows the trailing twelve month trading history for Caterpillar Inc., highlighting in green where the $101 strike is located relative to that history, and highlighting the $104 strike in red:

Loading+chart++2014+TickerTech.com

The chart above, and the stock's historical volatility, can be a helpful guide in combination with fundamental analysis to judge whether selling the July put or call options highlighted in this article deliver a rate of return that represents good reward for the risks. We calculate the trailing twelve month volatility for Caterpillar Inc. (considering the last 251 trading day CAT historical stock prices using closing values, as well as today's price of $103.39) to be 18%.

2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG

Markets

DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs