This Steel Stock Looks Like a Strong Pick for Options Bulls

An unwinding of skepticism could send the stock higher

Mar 15, 2022 at 11:35 AM
facebook twitter linkedin


The shares of steel producer Nucor Corporation (NYSE:NUE) have recently pulled back from fresh all-time highs, but are still enjoying a roughly 100% year-over-year lead, and have added about 18% in 2022. What’s more, the company raised its quarterly dividend 23% in December, and announced a $4 billion share buyback program, which is about 10% its market value. In other words, now looks like a great opportunity to bet on NUE’s next move higher.

 

nue march 15

 

The brokerage bunch is skeptical of Nucor stock, with five of the seven analysts in question carrying a tepid “hold” rating, while the 12-month consensus target price of $118.13 is a 12.8% deficit to its Friday close. What’s more, short interest added 33% over the past two months. An unwinding of the pessimism surrounding NUE could help the shares move higher in the near future.
 
A sentiment shift in the options pits could also boost Nucor stock. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), NUE’s 50-day put/call volume ratio sits higher than 97% of readings from the past year. This indicates long puts have been picked up at a much quicker-than-usual clip in the last 10 weeks. 
 
Echoing this, the security’s Schaeffer's put/call open interest ratio (SOIR) ranks in the elevated 89th percentile of its 12-month range, suggesting short-term options traders have rarely been more put-biased.
 
It's also worth noting Nucor stock's Schaeffer's Volatility Scorecard (SVS) sits at a 99 out of 100. In other words, the security has exceeded option traders' volatility expectations during the last year. Our recommended call has a leverage ratio of 4.3, and will double in a 23.4% pop in the underlying shares.
 
Subscribers to Schaeffer's Weekend Trader options recommendation service received this NUE commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.
 

Stop leaving money on the table with the same old broken options trading approach...

There is no options strategy that more perfectly capitalizes during earnings season better than this simple call and put buying strategy. Perfect for aggressive traders looking to recover their suffering portfolios so far in 2022. With the simplest possible options strategy, Schaeffer's team with 100+ years of options trading excellence, target 200% gains on every single trade. So many trades are being beaten down by the market, but don't be one of them! Don't waste another second... join us right now before the next trade is released! 

 
Schaeffer's Daily Bulletin Offer
 


 


 
Special Offers from Schaeffer's Trading Partners