Range-bound trade in ArcelorMittal
David Russell | [email protected]
optionMONSTER's tracking programs detected the sale of 13,000 September 18 calls for $0.74. An equal number of June 18 calls was bought at the same time for $0.41, but volume was below open interest at that strike. This suggests that an existing short position was closed and rolled forward in time.
The investor probably owns shares in the European steel maker and has been writing calls to earn income. The strategy obliges him or her to sell their shares for $18 if they go above that level, and yesterday's adjustment prolonged that commitment by three months. In return, the trader collected an additional $0.33 of income. (See our Education section)
It's also possible that both halves of the trade are opening positions, in which case the strategy is a short calendar spread. Regardless, the activity reflects a belief that MT will remain below $18 well into the second half. That could make sense because it's where the stock double-topped last month.
MT declined 4.91 percent to $15.68 yesterday. Shares have gone nowhere since August, despite the S&P rallying almost 7 percent in that time.
The trade pushed total option volume to 12 times greater than average in the session.