U.S. Steel draws range-bound play
Chris McKhann | firstname.lastname@example.org
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.