Huge call sale sees cap in Mechel

optionMONSTER

A huge call sale is betting that gains will be limited in Russian steel maker Mechel.

optionMONSTER's tracking systems detected the sale of 26,357 April 3 calls in one print for $0.15 this morning. This is clearly a new position, as open interest in the strike was just 1,610 contracts before the trade appeared.

The calls could have been sold naked with an initial bearish bias, or they could have been traded against stock in a covered-call position . The latter would be bullish up to the $3 strike price but would not participate in gains above that level. (See our Education section)

MTL is down 3.23 percent to $2.40 today. Shares fell from above $7 to below $3 from the beginning of the year to early June and gapped down further in November.

Call selling in the April 3 strike makes up almost all of the option volume in Mechel so far today. More than 30,000 contracts have changed hands in all, compared with a daily average of just 226 for the last month.

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