Steel Stock Rallies, Reclaims Trendlines

X is back above its year-to-date breakeven level today

Deputy Editor
Dec 16, 2022 at 9:37 AM
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United States Steel Corporation (NYSE:X) stock is bucking the broad market this morning, last seen up 3.9% to trade at $24.57, after the company hiked its fourth-quarter guidance amid an increase in commercial steel demand in the U.S. 

On the charts, X recently pulled back to its May, August, September, and November highs -- an area that aligns with its 200-day moving average. The steel stock boasts a 4.6% year-over-year lead, while the SPDR S&P 500 ETF Trust (SPY) is down 17.2% in the last 12 months. Today's gain has the shares not only reclaiming that 200-day trendline, but back above their year-to-date breakeven as well. 

An unwinding of pessimism in the options pits could also boost the shares. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) confirms a substantial put bias, with X's 10/day put/call volume ratio ranking higher than 85% of annual readings.

Echoing this, the security's Schaeffer's put/call open interest ratio (SOIR) of 1.53 stands in the 84th percentile of the last 12 months. This suggests short-term options traders favor bearish bets.

The good news for those looking to speculate, is X options can be had at a relative bargain right now. The stock's Schaeffer's Volatility Index (SVI) of 52% stands in the 22nd percentile readings from the past year. In other words, traders are pricing in extremely low volatility expectations on the stock at the moment. What's more, the equity sports a Schaeffer's Volatility Scorecard (SVS) of 97 out of 100, the stock tends to outperform said expectations -- a great thing for buyers. 

 

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