The steel stocks are on a run today. The 3 I watch are U.S. Steel (X), AK Steel (AKS) and Nucor Corp (NUE). Nucor is the biggest steel company in the USA and about the 5th or 6th in the world. Today Nucor is the only one thats down. U.S. Steel is up about 10% and AK Steel about 7.5% but down off there highs. X and AKS came out with a pretty good earnings report but in my opinion not good enough to bet the farm on. They’re doing better but they’re still not strong companies. I have a large Naked LEAP with X so I’m hoping it comes down. My LEAP expires next January, so I have some time. If you hit the link “LEAP” you will go to a post that gives the definition of LEAP.
A few minutes ago I sold a Call on AKS. I sold the 50 contracts of the $6.50 Calls. I wanted to sell the Call then buy the stock to make it a Buy-Write Covered Call. When I sold the Call the stock was at $6.58. I was hoping the stock was going to drop below the Strike Price of $6.50, but it went up higher so I never got to cover the Call. I believe (and hope) the steel stocks will be coming down in the next day or 2. If AK Steel drops below the Strike Price I will look to cover this Call because I think the future of this stock will be higher. I’m hoping for a little profit taking tomorrow. Here’s the option order:
Sell to Open 50 AKS 7/29/16 $6.50 C @ $.20 (+$1000)
This trade defiantly gets a Risk Factor of 5. The steel stocks are hot and this Call is In-the-Money by $.10. If this works out well for me it will be a nice 3 day gain. This I’ll be watching very closely.
Steve
The Options Coach