Market News

August 27, 2013  Tue 2:45 AM CT

A large trader is looking for U.S. Steel to stay range-bound through next spring.

optionMONSTER systems detected the sale of 3,000 April 18 puts for the bid price of $2.31 yesterday. This is clearly a new position, as open interest in the strike was just 14 contracts before the trade appeared.

Less than a minute later, a block of 120,000 shares of X was sold for $18.815. Combined with the puts, that would make for a delta-neutral play that is short volatility. This means that the trader is looking for shares to remain range-bound and/or for the actual volatility to be less than that implied by the options. (See our Education section)

X was up fractionally yesterday to close at $18.69, in the middle of its recent range. Shares of the steel maker were at a low around $16 in late April and tested resistance at $19.50 two weeks ago.
News Archives
OptionsHouse

Education & Strategy

Election Sector Rotation

Sector rotation is the process where mutual funds, portfolio managers, and investors in general, shift their investments from one sector of the economy to another.

More education articles »