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We’ve seen a massive amount of capital shift throughout the market over the last week. There has been a rotation out of tech stocks and into industrial stocks, which is why the Dow has left the Nasdaq in the dust lately. Investors also piled into financials and health care stocks following the election, and those sectors, along with the infrastructure stocks, seem to have gotten a bit overdone.

Caterpillar Inc. (NYSE:CAT) in particular is very overpriced, and I would say that, sometime in the next several months, it’s going to go down. That’s what we’re anticipating with the following trade, a ratio put debit spread:

Using a spread order, buy to open 1 CAT Feb. 17th $92.50 put and sell to open 2 CAT Feb. 17th $82.50 puts for a net debit of about $1.20.

A ratio debit spread is simply a way to lower the cost of buying options, as the two option(s) that you sell to open (short) helps offset the cost of the option that you buy to open. Therefore, this ratio put debit spread is a way to lower the cost of establishing a bearish put option trade. Many brokers will require the use of margin and/or a set amount of reserved capital and/or a margin account to execute a debit spread; contact your broker directly for specific requirements.

With this CAT spread, there’s a 10-point spread between the long and the short side — so, it should work well, even if the shares start to fall very fast. However, there is still some inherent risk:

Because you are short a naked put in this ratio put debit spread, you could be obligated to buy 100 shares of CAT at the $82.50 strike price for every 1 contract that you are short of the CAT Feb. 17th $82.50 puts. You’ll want to avoid that risk by exiting when CAT gets down to $82.50.

Ken Trester is editor of the popular Maximum Options program. Trester has been trading options since the first exchanges opened in 1973 with a winning streak that goes back to 1984 with money-doubling average annual profits since 1990.