Options Trading News

November 4, 2011  Fri 12:22 PM CT

U.S. Steel appears to reversing after a big drop, and one investor is betting on a rip to the upside.

optionMONSTER's Heat Seeker monitoring system detected the purchase of about 20,000 January 30 calls for $2.87 and the sale of an equal number of January 35 calls for $1.30, resulting in a net cost of about $1.57.

Known as a bullish call spread, the trade will earn a maximum profit of 218 percent if X closes at or above $35 on expiration. (See our Education section)

X is up 5.31 percent to $27.96 in afternoon trading but has lost more than half its value in the last
year. The stock bounced below $20 level in early October and has been pushing higher since. In the last week it seems to have found support above its 50-day moving average, which could lead some chart watchers to believe that it's reversing after a long decline.

The improvement comes amid continued negativity from steel companies, though X's last earnings report on Oct. 25 was better than expected. (See our new researchLAB service)

Overall option volume in the name is more than double the average amount so far today, with calls outnumbering puts by almost 7 to 1, according to the Heat Seeker.
Share this article with your friends



The fastest money in the market
View full report »

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 »