Options Action: Caterpillar

Considering Caterpillar just inked the largest deal in its history and gobbled up Bucyrus for $7.6 billion – how should you play this stock?

Rather than place your bets outright, Mike Khouw of Cantor Fitzgerald suggests using options.

Specifically he likes selling the January 85 calls against a long position.

Learn more about this trade. Watch the video now!


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Trader disclosure: On November 15, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Seymour owns (AAPL), (BAC), (POT); Adami owns (AGU), (BTU), (NUE), (C), (GS), (INTC), (MSFT); Adami’s wife works at Merck; Terranova owns (UPL), (C), (PEP), (OIH), (HES), (AXP), (GS), (FCX), (VRTS), (POT), (AAPL), (IBM), (DIS), (MCD)

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