Steel companies paused after hitting new highs last week, but traders are looking for at least three key names to resume their uptrend.
Stocks that had led the so-called Trump rally, such as industrials and materials, had cooled off since peaking on Friday. Yesterday, however, our tracking systems found bullish option activity in Cliffs Natural Resources, Teck Resources, and Nucor:
CLF: 12,200 April 13 calls were purchased for $0.72 to $0.82 against open interest of 556 contracts.
TECK: 3,300 May 20 calls were snapped up for $4.13 to $4.15 against open interest of 116 contracts.
NUE: 3,000 December 65 calls were bought for $0.36 to $0.48 against open interest of 276 contracts.
Long calls lock in the price where investors can buy stock, allowing them to profit from a rally with limited capital at risk. Their cheap cost can also generate significant leverage on a percentage basis if shares move in the right direction. (See our Education section)
CLF rose 4.08 percent to $9.31 yesterday and is up 74 percent in the last three months. The company, which produces iron ore used to manufacture steel, reported bearish results on Oct. 27 and is expected to announce its next quarterly numbers before the market opens on Jan. 26.
TECK fell 2.38 percent to $21.85 yesterday but is up 27 percent in the last three months. The miner, which provides metallurgical coal to steel makers, reported bullish results on Oct. 27 and is expected to release its next earnings numbers in pre-market hours on Feb. 9.
NUE fell 0.09 percent to $63.43 yesterday but is up 40 percent in the last three months. The steel producer announced bearish quarterly numbers on Oct. 20 and is expected to release its next earnings results before the open on Jan. 26.
Source: Finance.Yahoo.Com