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Option Brief: United States Steel Corporation (NYSE:X) put volume has raced ahead of call volume this afternoon. By the numbers, roughly 11,000 puts are on the tape compared to nearly 7,400 calls. Not surprisingly, the most active option is on the put side of the fence, at the May 27 strike.
More than 7,300 contracts have traded here -- including a 7,000-contract block -- exceeding open interest of 5,949. Meanwhile, implied volatility has edged higher, and 97% of the volume has traded off the ask, collectively suggesting buy-to-open activity. By purchasing the X puts, today's traders expect the stock to sink below $27 by the closing bell on Friday, May 16, when the back-month options expire. However, if the contracts remain out of the money through expiration, these individuals will part with 100% of the initial cash outlay.
On the fundamental front, CEO Mario Longhi said yesterday that U.S. Steel is thinking about replacing a second of its older blast furnaces with an electric arc furnace, following a January decision to replace one unit. The company also accused its South Korean rivals of dumping steel pipes and tubes in the U.S., thereby avoiding trade laws and driving down prices.
It's worth noting that today's put buyers may be looking ahead to X's first-quarter earnings report, which is tentatively scheduled for the last week of April -- just a couple of weeks before these May-dated bets expire. In its last four earnings announcements, X has exceeded analysts' consensus bottom-line estimates on three occasions.
Technically speaking, United States Steel Corporation (NYSE:X) is 0.5% lower this afternoon to trade at $27.60. Year-to-date, the shares have shed more than 6%.