Nucor investor buys time for rally

optionMONSTER

A large trader is buying more time for a rally in Nucor as steel producers continue their recent comeback.

optionMONSTER's Heat Seeker system detected the sale of 10,000 July 52.50 calls for $0.13 and the purchase of 10,000 August 52.50 calls for $0.41 yesterday. Volume was above previous open interest in the near-term contracts but above it in the later strike, indicating that a long position was rolled forward.

The trader closed the July calls, which expire at the end of next week, and opened a position one month later at a net cost of $0.28. The new long calls , which lock in the price where NUE can be purchased, are looking for it to rise above $52.50 by mid-August but will expire worthless if shares remain below that strike price. (See our Education section)

NUE rose 0.32 percent yesterday to close at $49.84. Shares have been bouncing mostly between $48 and $53 since mid-March.

The stock gapped down after the last earnings report on June 19 but bounced at the $49 level at the end of the month. Steel companies have been outperforming the S&P 500 for the last month, according to our researchLAB market-analysis tool, but Nucor has been one of the laggards in the group.

Total option volume in Nucor was just shy of 22,000 contracts yesterday, more than 15 times its daily average for the last month. Overall calls outnumbered puts by 29 to 1.

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