Settled Calls: Week of Oct 26, 2026

Caterpillar is coming off its strongest quarter in years and the stock has given most of it back. In August it reported adjusted EPS of $8.17 on revenue up 24% to about $20.5B, a record $72.1B backlog driven by data-center power generation, and a raised full-year sales outlook, and it has beaten in each of the last four quarters. The stock closed $876.54 that day and is now $687.00, 35% under its 52-week high and 12% under its 20-day average, with RSI 26.7. The est. annual return of +10.4% is at the bottom of the bull band, and the 36% miss rate keeps this at Tier 3 regardless; the play is a distance bet, not a forecast. The short sits 1.17 times the ±7.1% straddle away, and Caterpillar's last print moved 5.6% against a 6.1% implied move, so it does not have a habit of outrunning its priced move. Consensus EPS is about $6.86 to $6.92 on roughly $20.3B of revenue. No CSP overlap.

• Risk: The slide is shared with the whole AI-power complex (GE Vernova, Quanta and Vertiv are 14% to 16% under their 20-day averages), so a weak guide from any of them can reach Caterpillar regardless of its own quarter.
• Execution gate: re-derive both legs from Wednesday's close at 8.3% and 9% below, not from the dollar strikes above. Skip if the live straddle is above 8.3% (the short would sit inside the move) or the live credit is under 15% of the width ($0.75 on 5 points).

Rule-based screen agreed. The rule-based screen selected this ticker and structure independently that week.

• Signal class: Weak Bull
• Valuation vs its own normal P/E: +55%

1 of 12 lessons active that week named this play.

• bull-debit-call-structure-downgrade: Bullish debit structures (Bull Call Spread / Long Call) into earnings lose at a far higher rate than credit Bull Put Spreads across the entire sample, so downgrade any long-side thesis expressed as a debit call structure and prefer the put-credit expression.

The strongest fundamental profile on the calendar: SeerAI score, PE 16.98 against a Normal P/E of 23.62 (28% below), est. annual return +90.9%, forecast growth 40.0%, a 0% 1Y miss rate and a 100% beat rate. Management guided this quarter to $10.3B to $10.8B of revenue and $44 to $46 of EPS, against $8.97B and $39.25 last quarter, with an 83% to 85% gross margin. The stock has nonetheless fallen 47% from its high and sits 19% under its 20-day average, on memory oversupply fears rather than anything in its own numbers. On the numbers this is a Tier 0 compression signal, which would call for a long call, but one at-the-money call into this print costs about $6,700, more than four times the Tier 0 ceiling, and the learned policy prefers the put-credit side for bulls anyway. The put spread models 18% of its width, under the 20% floor, so it runs in the fallback lane at Tier 3. The short sits 1.11 times the ±10.8% straddle away, and SanDisk has recently moved less than priced: +8.3% on a roughly 21% implied move in April, and about 3% lower after hours on a mixed guide in August. Active CSP: $1,300 put exp Oct 30 (selection of Oct 19, marks as of Oct 23), with the stock already 4.8% under that strike. Treat the two as one long SanDisk position.

• Risk: The memory group has been selling off on Chinese supply news and capacity fears since July, and a guide that disappoints only slightly can still knock 10% off a stock that has run this far.
• Execution gate: re-derive both legs from Thursday's close at 12% and 12.8% below; do not use the dollar strikes if the stock has moved. Skip if the live straddle is above 12% (the short would sit inside the move) or the live credit is under 15% of the width ($1.50 on 10 points). If the chain lists only wider strikes, keep the 10-point width rather than taking a wider spread.

From the written analysis. The weekly analysis made this call. The rule-based screen did not select this ticker and structure that week.

1 of 12 lessons active that week named this play.

• bull-debit-call-structure-downgrade: Bullish debit structures (Bull Call Spread / Long Call) into earnings lose at a far higher rate than credit Bull Put Spreads across the entire sample, so downgrade any long-side thesis expressed as a debit call structure and prefer the put-credit expression.