Is ArcelorMittal finally turning corner?
David Russell | [email protected]
Several times earlier this year, we cited call selling as the European steel maker journeyed from $17 to $11. Each time, investors bought back higher-strike contracts they had bought and sold more at the lower strike, collecting income in return for being negative on the stock.
Today's action is the polar opposite. This time, optionMONSTER's Heat Seeker system shows 4,000 September 13 calls bought for $0.91 and an equal number of September 14 calls sold for $0.36. Volume was below open interest at the lower strike but not the higher one, indicating that a short position was rolled up.
Instead of collecting a credit, this time the trader paid a debit of $0.55. The investor also raised the price at which he or she is willing to unload shares. (Today's transaction may be an adjustment of a trade from March.)
MT is up 5.49 percent to $13.64 on afternoon trading and has risen 21 percent since the beginning of July. Much of that move occurred in the last week as global metal stocks rallied on strong trade numbers from China earlier this week.
Overall, the economic data has been impressive in the last two weeks, punctuated by better-than-expected factory data in the United States, Europe, and China. Employment trends have also impressed, and once-distressed emerging-market financials have been making higher lows. All of that is consistent with upside potential in a global steel name like MT.
In addition, there is reason to believe that coal miners could be exiting a multiyear bear market. Coal miners and steels tend to move in tandem. (See related story)
Total option volume in MT is almost twice the daily average so far in the session. Calls outnumber puts by more than 7 to 1.