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

Archived Webinar

Education & Strategy

Options Academy: More on the Covered Call Strategy

Last week, we talked about the Covered Call and the misconceptions that surround it. We spoke about how an investor must realize that the Covered Call is actually a premium collection strategy and not so much a directional one. If an investor can grasp this idea, the investor stands to do a heck of a lot better in the strategy than they currently do.

View more education articles »