U.S. Steel has made a nice move, and one investor doesn't want
to surrender those profits.
optionMONSTER's Depth Charge monitoring system detected the
purchase of 41,000 January 20 puts for $2.07 and the sale of an
equal number of January 17 puts for $0.87. Volume was below open
interest at the lower strike, indicating that an existing position
was closed and rolled higher. It was the largest transaction to
appear in the option market so far today.
The trader is probably using the contracts to
hedge a long position
in the iconic steel company. Swapping to the 20s raises by $3 the
level at which they have protection, at a cost of $1.20. (See our
section for more on how to insure your investments with options.
X is up 0.26 percent to $20.07 in morning trading and 12 percent in
the last week. The stock has been ripping higher along with other
metals amid increased enthusiasm toward the global economy. It's
now back above its 200-day moving average for the first time since
February, which could make some chart watchers nervous about a
pullback and help explain today's activity.
The transaction pushed overall option volume in X to 8 times
greater than average so far today. Puts account for more than
four-fifths of the total.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.
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