US Steel Options (X): Unusual Trading Activity

| March 21, 2012 | 0 Comments

United States Steel (X) CallsOptions in steel giant United States Steel (X) experienced quite a large amount of unusual trading activity yesterday.

As X closed the day at $31.37, the overall options activity showed a staggering 46,000 contracts change hands.  That’s nearly 5 times the normal activity for US Steel.

And just about 35,000 of these options indicated bullish activity.

Option traders came in buying mainly the 31, 32, and 33 strike calls for March and April’s expiration.  The prices ranged from $0.16 for March calls to $.83 for April Calls.  When we see option buying under $1.00, it almost always reflects speculative buying.

However, that’s not all.  Another large trade in X was also spotted on our tracking system.

This was the sale of over 7,000 contracts of the April 31 strike put options for $1.30.

These option sellers obviously believe that US Steel stock will remain above $31 by April’s expiration.  If so, they’ll get to keep the whopping $910,000 in premiums they collected.

This unusual activity came on the heels of news that steel demand in China is slowing considerably.

However, I believe this news was overblown.

In fact, an analyst from Morgan Stanley came out yesterday and said, “The sentiment in the Chinese steel markets is improving and mills are gradually raising prices as inventories decline.”  This is certainly positive news for steel makers.

The upshot of all this is option traders believe there’s a unique opportunity to take advantage of some overblown news.  We’ll see how it all plays out!

Another general observation– it’s definitely been a bullish week in the options market this week!  I say this because that’s what most of the unusual options trading activity is reflecting.  Remember, bullish activity means option traders think a stock is going to rise in value.

For more detailed information on unusual options activity and how you can profit from it, be sure to sign-up for our daily newsletter, Options Trading Research.  It’s always 100% free and packed full of option trading ideas you can use immediately in your own portfolio.  Click here to subscribe for free.

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Category: Unusual Options Trading Activity

About the Author ()

Marcus Haber is the co-editor of Options Trading Research and boasts well over a decade of real-life options experience. Learning from some of the biggest names in the business, Marcus has served as an Options Strategist for a number of firms and was also appointed to the Options Advsiory Board with Pershing, a branch of the Bank of New York.