Eleventh-Hour Bulls Take a Shot at Nucor Corporation (NUE)

Nucor Corporation (NUE) is down sharply on a bleak profit forecast


Published on Mar 19, 2015 at 1:46 PM
Updated on Apr 20, 2015 at 5:32 PM

Plummeting steel prices forced Nucor Corporation (NYSE:NUE) to reduce its first-quarter earnings guidance today. Investors haven't taken kindly to the development, with the shares last seen off 6.5% at $46.06 -- and back in the red on a year-to-date basis. However, a number of options traders are betting on a short-term rebound for NUE.

Specifically, calls are running at 12 times the usual intraday rate, and outpace puts by a more than 5-to-1 margin. Most active by a mile is the March 47 call, where roughly 11,250 contracts have been exchanged -- and other data suggests speculators are purchasing new positions. By scooping up these out-of-the-money calls, the traders are anticipating NUE will muscle north of $47 by tomorrow's close, when front-month options expire.

Taking a step back, NUE puts have been the options of choice in recent weeks. In fact, the equity's 10-day put/call volume ratio across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE) and NASDAQ OMX PHLX (PHLX) checks in at 1.50 -- higher than 87% of comparable readings from the last year.

It's worth noting that Nucor Corporation (NYSE:NUE) isn't the only steelmaker struggling today. For instance, just a day after gaining 7.8%, AK Steel Holding Corporation (NYSE:AKS) is down 1.8%.

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