How much lower can AK Steel go?
AK Steel is already near all-time lows, and one large trader is looking for declines by the end of next week.
optionMONSTER's Depth Charge system shows that 5,000 Weekly 2 puts expiring Oct. 9 were purchased for $0.12 yesterday. This is clearly a new position, as open interest in the strike was a mere 6 contracts before the trade occurred.
Long puts lock in the price where a stock can be sold no matter how far it might drop, gaining value in a selloff. The contracts can be purchased either as an outright bearish bet or a hedge on a long-stock position. (See our Education section)
AKS fell 2.18 percent to $2.24 yesterday, approaching its lifetime low of $1.74 reached in September 2003. The steel producer, which has been hammered with the rest of the declining materials sector, reports earnings on Oct. 27.
Yesterday's total option volume in the name was more than 60 percent higher than its daily average for the last month. Overall puts outpaced calls by 3 to 1.
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