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.)
Share this article with your friends


Premium Services

Education & Strategy

The art of trading

As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

View more education articles »