What's behind put buying in AK Steel
David Russell | [email protected]
optionMONSTER's Depth Charge monitoring system detected the purchase of about 7,000 December 3.50 puts for $0.44 to $0.49. Volume was more than 9 times open interest, indicating that new positions were initiated.
Puts lock in the price where shares can be sold in the Ohio steel maker, protecting against a selloff. Investors can now be long in hope years of weakness will reverse, while limiting the amount of money that can be lost if they tank again. (See our Education section for other hedging strategies.)
AKS rose 4.76 percent to $3.74 yesterday but is still at levels last seen in the first half of 2005. The stock has climbed 23 percent since the start of July as a stream of positive economic reports brightens sentiment toward global growth. U.S. Steel and Alcoa saw bullish option activity yesterday.
Some 19,500 contracts changed hands in the session, compared with the 3,173 average. Puts accounted for a bearish 78 percent of the total, according to the Depth Charge.