Volume Spike Investor

We have just seen a huge move in call options activity in Caterpillar Inc. (NYSE: CAT) today.  While this is a implied as a bullish bet, that means someone else took the other side of the trade.  It is also odd that you would see this sort of trading in the few days after its earnings.  There has been little corresponding trade in the stock as shares are up as of 2:13 PM EST by 0.25% at $59.75 on 11.4 million shares vs. average volume of 12.5 million shares.  Here is the options activity.

40,000 contracts traded in the FEB-2010 $70 CALLS, and the open interest was only 1,139 contracts before this.  No corresponding PUT volume was seen and that trade is larger than the entire series of FEB-2010 PUTS.

We also two big trades in the JAN-2010 $55 CALLS for 15,156 contracts vs. open interest of 27,447 contracts and we saw in the JAN-2010 $60 CALLS some 20,561 contracts vs. a prior open interest of 34,919 contracts.  No corresponding PUT options were seen for FEB-2010.

3:15 PM EST UPDATE: OptionsHawk.com just notified us that a trade took place here locking in some gains on a previous bullish bet.  When we looked back over these, they appeared as though they were roll-outs into new contracts with a longer expiration and higher strike price.

JON C. OGG
OCTOBER 21, 2009