Schaeffer's Options Update: Caterpillar Buried Under Heavy Put Volume

Shares of blue-chip construction equipment firm Caterpillar (NYSE: CAT) plunged more than 13% last week, as traders reacted to the company's lackluster earnings report and massive job cuts. On Friday, CAT increased its pink-slip collection, adding 2,110 new job cuts to its previously announced 20,000 cuts. Today, the shares are off more than 1.5%, as the stock tagged its third consecutive 52-week low.

Looking to speculate on a continued decline in CAT shares, options traders have piled into puts today. So far, more than 36,000 CAT puts have crossed the tape, more than tripling the stock's average daily put volume and placing the shares on our Intraday Volume Explosion List. Nearly all of this activity was centered at the February 25 and February 30 strikes. The vast majority of the February 25 puts changed hands at the bid price, while the February 30 puts mostly traded at the ask price. This activity appears to be a bearishly oriented spread.

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