Here is the risk graph of the trade I opened Monday morning (USA) on CAT using the CAT of Nines system. It is a Bear Credit Spread which is also known as a Bear Call Spread. It has been placed for a potential
$210 profit from my $1,040investment in 28 days. Let's see how it goes.
CAT has finally signalled a move, and it is bearish. The setup leads us to use a credit spread according to the system.
By the rules we select the expiry and strike by considering the ''Open Interest'' and ''Bid-Ask'' spreads within the first 21 days of available options.
But ... a special consideration for this particular trade is the pending speech by the USA Federal Reserve that has the US markets tied in knots. Lately CAT has been showing price increasing without any momentum support, and so it is more prone to fall than rise in my view; however, I will be watching the market reaction to the speech and deciding from that outcome.
With the August 2016 expiry date having passed, HOG Rider traders are now watching the chart for an entry signal. At this point it is shaping up for a bullish trade, however we will need to see a bullish bar close above the 9 WMA (red line) before we can open a trade.