How to Play the Nucor Stock Pullback

Options traders have been more bearish of late

Deputy Editor
Dec 16, 2021 at 1:43 PM
facebook twitter linkedin

The shares of Nucor Corporation (NYSE:NUE) were last seen 6.8% higher to trade at $115.57. Today's pop comes just one session removed from the equity biggest single-day percentage loss of 2021, with NUE tumbling 8.6% yesterday. Yesterday's pullback brought the steel stock back toward a historically bullish trendline; a trendline that's been quite friendly to the steel stock in the past month. 

Specifically, Nucor yesterday stock came within one standard deviation of its 160-day moving average, after spending a considerable amount of time above this key trendline. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, four similar signals have occurred in the past three years. The security enjoyed a positive return one month later in 67% of those instances, averaging an 8.6% gain.

NUE Chart Dec 16

Options traders have been betting on puts. This is per Nucor stock's 10-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) of 0.66, which stands higher than 90% of readings in its annual range. So while calls still outnumber puts on an absolute basis, the high percentile indicates that such a put skew is rare for the last 12 months.

Echoing this is the stock's Schaeffer's put/call open interest ratio (SOIR) which sits in the 93rd percentile of its 12- month range. This means short-term traders have rarely been more put-biased.  

Lastly, it's also worth noting the equity's Schaeffer's Volatility Scorecard (SVS) sits at 94 out of 100. This means NUE has exceeded options traders' volatility expectations in the past year.


If you are not making money with options, you aren’t buying options like this…

There is no options strategy that more perfectly approaches trading the fastest moving and most volatile stocks available in the marketplace than this one. In fact, there is no strategy that better utilizes put options for optimal returns and a real trading edge over other traders in the exact same market. New options traders fail out at an incredible rate without proper trade research, execution timing, and option picking. Capitalize on Schaeffer’s 100+ years of options trading excellence with the most coveted product launch in company history. Don't waste another second... join us right now before the next round of trades are released!



Special Offers from Schaeffer's Trading Partners