Options Trading News

June 13, 2013  Thu 4:14 AM CT

Traders apparently think that ArcelorMittal is going nowhere in a hurry.

optionMONSTER's tracking programs detected the purchase of 12,850 December 13 calls for $0.82 and the sale of an equal number of December 12 calls for $1.19. Volume was below open interest in the 13s, indicating that an existing short position was closed and rolled to the lower strike.

Investors sell calls when they believe that upside is limited, allowing them to collect premiums as income if they're right. In the case of yesterday's credit spread, the trader received a $0.37 of premium while lowering by $1 the price at which he or she is effectively short the stock. The trade reflects a belief that the European steel maker will remain weak until at least late this year. (See our Education section)

MT fell 1.82 percent to $11.87 yesterday and has been declining steadily for the last three years. While it's been taking steps to improve its finances, a weak global economy has discouraged investors from owning industrial metals. (See the steel-maker group on researchLAB for more)

Total option volume in the name was 7 times greater than average in the session.
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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.

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