Option Bears Rush to United States Steel Corporation (X)

United States Steel Corporation's (X) April 25 put is in high demand today

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Published on Jan 2, 2015 at 3:01 PM
Updated on Apr 20, 2015 at 5:32 PM

United States Steel Corporation (NYSE:X) is off 1.2% today to trade at $26.44. This downward movement is nothing new for the stock, as it has underperformed the broader S&P 500 Index (SPX) by roughly 29 percentage points in the last three months, and dropped a whopping 43% since its three-year high of $46.55 on Sep. 17. Activity in the equity's options pits this afternoon reflects this bearish trend, as well.

Specifically, speculators have preferred puts over calls. Compared to what's normally seen at this point in the session, the security's puts are trading at double the average pace. They also more than triple the number of calls, with traders taking a distinct interest in the April 25 put.

Digging deeper, most of the 7,441 contracts that have crossed at this strike were likely bought to open. These traders anticipate X will drop below the $25 level by the close on Friday, April 17, when the contracts expire. Looking back, the security hasn't traded below $25 since June 20.

Today's activity may mark a shift in speculator sentiment, as X's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 1.58 ranks in the bullishly skewed 73rd annual percentile. Should this optimism begin to fade, the security could face more downward pressure.

United States Steel Corporation (NYSE:X) could also get hit by waning confidence within the analyst community. Even with the stock's poor performance of late, 46% of covering firms maintain a "strong buy" rating, leaving the door wide open for potential downgrades to send the shares lower.


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