Covered Call on Caterpillar (CAT)
A covered call on Caterpillar (CAT) is a neutral to mildly bullish options strategy. A covered call on Caterpillar means holding 100 shares and selling one out-of-the-money call against them to collect premium. It trades away upside above the strike for income. Strikes below are illustrative, anchored to CAT's real 889.31 USD price as of 2026-07-22 — not a live option quote.
Last updated 2026-07-22 · Source: FMP end-of-day close (real price); strikes illustrative, educational only — not a live option quote
How does a covered call on CAT work?
A covered call on Caterpillar means holding 100 shares and selling one out-of-the-money call against them to collect premium. It trades away upside above the strike for income.
Outlook: neutral to mildly bullish. Real reference price: 889.31 USD (as of 2026-07-22).
How to set up the covered call (illustrative)
| Leg | Detail (illustrative) |
|---|---|
| Own | 100 shares of CAT (real last price ~889.31 USD) |
| Sell | 1 call, illustratively ~4% OTM near the 924.88 USD strike |
Strikes are illustrative percentages of the real price, not live option quotes. Pick actual strikes and expiries from a broker's option chain.
Max profit, max loss and breakeven
| Max profit | (call strike − share cost) + premium collected = about (924.88 USD − your cost) + premium |
|---|---|
| Max loss | share cost − premium collected (if CAT falls to zero) — same downside as owning the shares, reduced by the premium |
| Breakeven | share cost − premium collected |
When to use it — and the risks
When: When you own CAT and expect it to trade flat-to-slightly-up into expiry, and want to earn income on the position.
Risks: Upside above 924.88 USD is capped; you still bear the full downside of holding CAT (minus the premium).
Related research pages
Frequently asked questions
What is a covered call on CAT?
A covered call on Caterpillar means holding 100 shares and selling one out-of-the-money call against them to collect premium. It trades away upside above the strike for income.
How do you set up a covered call for CAT?
Own: 100 shares of CAT (real last price ~889.31 USD). Sell: 1 call, illustratively ~4% OTM near the 924.88 USD strike. Strikes shown are illustrative, anchored to CAT's real 889.31 USD price as of 2026-07-22 — choose actual strikes from a live option chain.
What is the max profit and loss?
Max profit: (call strike − share cost) + premium collected = about (924.88 USD − your cost) + premium. Max loss: share cost − premium collected (if CAT falls to zero) — same downside as owning the shares, reduced by the premium. Breakeven: share cost − premium collected.
When should you use a covered call on CAT?
When you own CAT and expect it to trade flat-to-slightly-up into expiry, and want to earn income on the position. Risks: Upside above 924.88 USD is capped; you still bear the full downside of holding CAT (minus the premium).