A long-term trade is looking for AK Steel to move sharply higher or lower.
More than 11,000 AKS options have already changed hands so far today, 3 times its daily average for the last month, according to optionMONSTER systems. Most of that volume came in one print in the January 2015 3.50 puts.
A trader bought 10,000 of those contracts for $1.06 in volume that far exceeded previous open interest of 362, clearly showing that this is a new position. At the exact same time, 350,000 AKS shares were purchased for $3.5714.
Given that the delta of the puts was -0.35, this combination of stock and options creates an overall market-neutral position. The trader is therefore looking for a big move higher or lower and/or for the actual volatility to be greater than that implied by the put prices. (See our Education section)
AKS is down 0.84 percent to $3.51 in afternoon trading, a level where it has been hovering since the start of May. Shares of the steel producer were above $6 last September but hit a low of $2.76 in mid-April.
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