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Option Trends: Barrick Gold Corporation (USA) (ABX) and United States Steel Corporation (X)

Call buyers are eyeing ABX, while X has attracted the attention of put buyers

by 11/6/2013 2:42:58 PM
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Options players are taking sides on commodity stocks Barrick Gold Corporation (USA) (NYSE:ABX) and United States Steel Corporation (NYSE:X), according to data from the major options exchanges. In recent sessions, traders have favored bullish bets on ABX, and bearish plays on X. Here's a rundown of what's happening in the options pits for these two major metal names.

First up, traders on the International Securities Exchange (ISE) and Chicago Board Options Exchange (CBOE) have bought to open 20,237 calls on ABX during the past five sessions, compared to only 7,947 puts. The resulting five-day call/put volume ratio of 2.55 highlights a notable preference for bullishly oriented options.

ABX price chartIn fact, Schaeffer's put/call open interest ratio (SOIR) for Barrick Gold Corporation (USA) (NYSE:ABX) stands at 0.44, with calls more than doubling puts among options set to expire within three months. This ratio ranks above only 3% of other such readings over the past year, as short-term options players have rarely been more call-heavy on ABX.

It's been a rough year for Barrick Gold shares, which have shed nearly 48% to trade at $18.33. If the stock's underperformance continues, a capitulation by the bulls could pressure ABX even lower.

As for X, the shares have racked up a five-day ISE/CBOE put/call volume ratio of 1.78, as speculators have bought to open 32,978 puts and 18,549 calls during this time frame. This bearish slant is echoed by the stock's SOIR, which weighs in at 1.49. Not only do near-term puts easily outnumber their call counterparts, but this ratio also ranks in the 99th percentile of its annual range. In other words, speculative options traders have shown a greater skew toward puts over calls only 1% of the time.

With United States Steel Corporation (NYSE:X) hitting a new annual high of $27.66 earlier today, this skepticism is a little surprising. However, it's possible that traders who have taken part in X's 67% rally from its April low could be buying protective puts to lock in some paper profits. At last check, US Steel shares have pulled back 2.9% to trade at $26.50.


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