ption Players Call a Bottom to Caterpillar Inc.'s Post-Earnings Plummet
Bright and early this morning, Caterpillar Inc. (CAT - 105.76) reported a second-quarter profit of $1.02 billion, or $1.52 per share, up from $707 million, or $1.09 per share, in the year-ago period. Excluding items, earnings arrived at $1.72 per share, just short of analysts' bottom-line estimate for earnings of $1.75 per share. Meanwhile, revenue increased 37% to $14.23 billion, surpassing the Street's prediction for revenue of $13.55 billion.
What's more, Caterpillar upped its 2011 earnings forecast to between $6.75 and $7.25 per share on revenue of $54 billion to $56 billion, as sales continue to improve. Moreover, CAT said that it is planning to spend $5 billion by 2015 to increase production capacity and meet global demand.
Nevertheless, it seems that the Street is fixated on CAT's earnings miss, with the shares tumbling over 5% today, to hover around $105.76. As a result, CAT is now set to close the session below its 10-day and 20-day moving averages for the first time since June 17.
Meanwhile, it seems that option players are calling a short-term bottom to CAT's post-earnings slide, with over 9,400 contracts changing hands on the weekly August 105 put. Most of these puts have traded at the bid price, hinting at seller-initiated activity, and today's volume has easily outpaced open interest at this weekly option. By writing to open CAT's weekly August 105 put, the option players are betting on the equipment issue to remain above the $105 level through today's close.
