Summer is about to begin and this year will start with one of the most relevant event of the last...Read More
Non-directional strategy on Caterpillar (CAT).
CAT: short to long term
Today we talk about this stock in terms of a bullish long-term vision that may evolve in a medium long-term trend.
Looking at this short-term chart, we can see that a bullish “head and shoulders” pattern has been taking place and it’s now completing, unless markets live a reversal. A shy fall to area 70 – 70.5 may indicate a good opportunity for going long, but with a close stop loss that doesn’t exceed the lows in area 69. Level 73.5, surpassed last week – 02/06- , can identify the beginning of the bullish trend and, despite the low volumes, can suggest a non-directional strategy in options, in this case trading PUTS.
Today’s inspiration refers to a strategy based on Facebook (FB) which will make you benefit from rising volatility. The strategy is related to the purchase of a Broken Iron Condor.
BROKEN IRON CONDOR
For the last 40 days Facebook has remained almost range-bound in a very limited area, fairly 2%, which can be considered as a real anomaly for such a capitalized stock. Furthermore, a very good indication to set a debit Iron Condor is given by volatility which, as you can see from the chart below, results to be below zero.
- Jill April 5, 2016