AK Steel Holding Corporation (AKS) Put Players Hit the Exits

Put sellers are looking to dodge assignment ahead of expiration as AKS bounces

Dec 18, 2015 at 11:38 AM
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Ohio-based steel producer AK Steel Holding Corporation (NYSE:AKS) has had a rough year, shedding nearly 65% of its value so far in 2015 and hitting a 12-year low of $1.99 earlier this month. The shares have been slumping alongside industry peers, as low-priced foreign steel imports weighed on sales, in spite of a recent increase on duties for countries that previously benefited unfairly from government subsidies.

Despite reporting its best quarterly earnings in six years in late October, AKS has continued its slide on the charts. But the shares are up 1.7% today at $2.08, even after the company predicted a wider-than-forecast fourth-quarter loss last night -- perhaps due to an uptick in iron ore futures.

Analysts and traders alike have been bearish on AKS, with 10 of the 12 brokerages covering the stock maintaining a "hold" or "sell" rating. And short interest currently accounts for 28.5% of the security's available float -- an amount that would take nearly 10 days to buy back, at typical volumes.

Options traders aren't optimistic, either. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), AKS has a 50-day put/call volume ratio in the 98th annual percentile, pointing to a heavily bearish skew among speculative players.

According to data from Trade-Alert, total open interest on the stock is currently in the 100th annual percentile, though overall option volume so far today is lighter than usual. Puts are definitely the options of choice, however, accounting for the four most active AKS strikes. That said, data from the ISE indicates some buy-to-close activity at the in-the-money December 2.50-strike put, which expires tonight -- suggesting some premium sellers are closing out their bets on AK Steel Holding Corporation (NYSE:AKS) to dodge assignment ahead of tonight's expiration.

 

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