2 Steel Stocks Boasting Attractive Options

X and NUE are trying to come back from late-March declines

Managing Editor
Jun 27, 2018 at 1:00 PM
facebook twitter linkedin


Looking across Wall Street, two steel stocks options traders may want to consider are United States Steel Corporation (NYSE:X) and Nucor Corporation (NYSE:NUE). Below, we will take a closer look at X and NUE, how the pair have been faring on the charts, and why now may be a good time to bet on the steel stocks' next leg higher, per data from Schaeffer's Senior Quantitative Analyst Rocky White.

X Stock Has Been Stuck In Neutral

United States Steel stock has been in a rocky sideways pattern since its big retreat back in March. On the flip side, X has seen a floor of support at the $33 mark, while simultaneously bouncing off the 200-day moving average. United States Steel stock is down 1.2% at $34.90, at last check.

According to White, in the last five times X has pulled back to this trendline after a lengthy stay above it, the stock has gone on to average a one-month gain of 17.8%, posting positive returns all but one time. Based on its current perch, another move of this magnitude would put the shares back near $41.16.

Daily Chart of X With 200MA

Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows the security with a 10-day call/put volume ratio of 2.50, ranking in the 75th percentile of its annual range. This means that U.S. Steel calls have been purchased over puts at a faster-than-usual clip during the past two weeks.

What's more, now seems to be a great time to target short-term options on the steel concern. This is according to its Schaeffer's Volatility Index (SVI) of 45%, which ranks in the 29th percentile of its annual range. 

Nucor Shares Keep Grinding Higher

Similarly, NUE has failed to recover from a late-March pullback. The 200-day moving average has been a line of support for Nucor stock since then, however, pushing the steel giant just above its breakeven year-to-date. At last check, NUE was slightly lower at $64.10.

Per his analysis, White noted that in the last seven times the security has pulled back to this trendline after a lengthy stay above it, the stock has gone on to average a one-month gain of 5.3%, posting a positive return 86% of the time. Based on its current perch, another move of this magnitude would put the shares back near $67.73. And NUE is also sporting attractive options premiums, according to its SVI of 29%, which ranks in the 28th percentile of its annual range.


Daily Chart of NUE with 200MA

Grab your FREE Eternal Contrarian report!


 




 
Special Offers from Schaeffer's Trading Partners