Options Trading News

March 28, 2013  Thu 3:35 AM CT

Steelmakers have been weak, but someone thinks Brazil's Siderurgica Nacional is finally on solid ground.

optionMONSTER's monitoring programs detected the sale of 5,000 September 4 puts for $0.30. There was no open interest before the transaction appeared, indicating that a new position was initiated. It accounted for almost all the options activity in the company, which normally trades fewer than 1,500 contracts per session.

SID rose 0.22 percent to $4.52 yesterday, and is attempting to hold support around the same level where it bounced in July. It has lost more than three-quarters of its value in the last three years.

Selling puts obligates the investor to buy shares at the strike price if they close below it at expiration. But if they remain above that level, he or she will keep the premium and the contracts will expire worthless. See our Education Section for more on the strategy, which investors often use when they like a stock but don't want to expend capital getting long.

The trade also contrasts with the activity in ArcelorMittal, which a large investor has been riding lower this month.
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 »