One investor sees little hope for ArcelorMittal, which has
been falling for years.
, optionMONSTER's tracking programs detected unusual activity in
the September calls as an investor rolled a short position in
10,000 contracts down from the 15s to the 14s. They collected
$0.35 of income at the time.
He or she returned to the trade yesterday, buying back the
September 14s for $0.83 and opening a new short position in the
September 13s for $1.23. That's another $0.40 of income.
Investors usually sell calls against long positions in a stock,
generating premium and reducing the volatility of a bullish
position. The drawback of the trade is that they must sell their
shares for the strike price. So, while the recent transactions
have brought in $0.75 of cash, they've also eliminated the
possibility of $2 in upside down the road. See our
for more on the strategy, known as a
MT fell 1.80 percent to $13.13 yesterday. The stock peaked over
$105 in mid-2008 and has been trending lower since amid weak
demand for steel. It's been responding by closing plants, cutting
its dividend and selling shares to support its hefty debt load.
Both Moody's and Standard & Poor's lowered its credit rating
to junk status last year.
Total option volume was 5 times greater than average in
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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