• Swing Trade Idea (CAT) – March 02, 2023

    OptionsPlay’s bearish trade for Thursday, March 2nd is Caterpillar Inc. (CAT). CAT is part of the Industrials Sector, which has performed at 1.22% over the last month, with CAT underperforming relative to its sector at -4.91% over the same period.

    CAT had a strong rally since September 2022 and is reaching bullish exhaustion as the strength is declining. It is close to an area of resistance of $253, from where a pullback is expected, with the next support at $220 and then $200. As this is a counter-trend trade, we expect CAT to continue underperforming relative to the Industrials sector and trade lower. 

    As a close, if CAT were to trade above $253 for multiple days, this would invalidate our analysis and we will consider cutting losses on the trade. We also will consider cutting losses on this options trade if the value of the vertical spread moves above $11.26.

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