Shares in U.S. Steel are bucking the broader market Thursday, adding 1.05% to stand at $20.26 and off an earlier-in-the-week low of $15.68. The move follows a midweek rally on heavy share volume after a two-month malaise for the stock.
It appears that an option trader closed out a bullish call option position at the Sep 18.0 strike and placed a fresh upside play using the Sep 22.0 and 25.0 strikes. The 18.0 calls expiring in September were sold at a 3.00 premium on volume of 14,000 contracts and likely the closing side of already established positions. Call options at the same expiration were bought and sold across the two higher strike prices for a net premium of 75-cents using 15,000 lots. That would imply a breakeven share price of $22.75 for the strategy, meaning the stock would need to rally by a further 12.3% from where it last traded. The 3.00 spread caps the maximum gain from the trade to 2.25 points or $3.375 million in the event the share price rallies to $25.00 or above.
Chart shows rebound for stock prompts bullish call spread in U.S. steel