Options Trading News

December 5, 2012  Wed 5:07 AM CT

Mechel is attracting long-term bullish trades as the Russian steelmaker tries to hold long-term support levels.

optionMONSTER's Heat Seeker tracking system detected the purchase of almost 5,700 January 2014 10 calls, most of which priced for $0.75 and $0.80. The activity dominated yesterday's option volume in the name, which normally trades barely 200 contracts per session.

Long calls lock in the price where investors can buy the stock, so they can generate significant leverage in the event of a rally. Yesterday's buying was a bit unusual because those calls don't expire for more than a year, so they're definitely taking a long-term view. (See our Education section)

MTL rose 1.15 percent to $6.14 yesterday. The stock has been clinging to three-year lows around $6 since May. Its chart is similar to that of most other steel and coal companies, which have attracted increasingly bullish trades as China's economy recovers.

Calls outnumbered puts by a bullish 168-to-1 ratio in the session, according to optionMONSTER data.

(A version of this post appeared on InsideOptions Pro yesterday.)
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I have written a few things on the Covered Call Strategy over the last two weeks. Please understand that those two previous articles plus this one do not constitute a proper, fully in-depth lesson on the Covered Call Strategy like we have in our classes at Option Monster Education. I have picked out a few topics that I believe were worth noting and today I am going to add the final one.

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