Act on Unusual Options Activity in 3 Top Stocks
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- Will Ashworth suggests implementing a Protective Collar options strategy for investors holding Caterpillar (CAT) due to high Vol/OI ratios, providing downside protection while capping upside potential.
- Caterpillar (CAT) stock, up 118% over the past 12 months, presents an opportunity to implement a protective collar with a Feb. 27 $820 strike call, capping gains at 7.8% over the next week.
- Protective Collar Strategy involves selling a put below the share price and buying a call above it, offering downside protection while limiting future gains, suitable for uncertain market conditions.
Why it matters: This strategy offers a way for investors to protect substantial gains in a volatile market, balancing risk and reward amid economic uncertainty and potential geopolitical shocks.
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