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Caterpillar (CAT) is approaching overbought levels rarely seen, along with implied volatility readings in the lower 10% percentile. I like this combination of expensive stock and cheap options, so let’s jump in and take a short term counter-trend bearish put diagonal position.



Buy to open CAT December 92.50 puts (expire 12/16/16)

Sell to open CAT November 90 puts (expire 11/18/16)

2.15 net debit