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Unusual play is bullish on U.S. Steel

An unusual spread is looking for gains in U.S. Steel as shares trade back to highs from the beginning of the year.

optionMONSTER systems show that a trader bought 20,511 January 23 puts for the ask price of $0.77 against previous open interest of 25,933 contracts. At the same time, he or she sold the same number of January 26 puts for the bid price of $1.99 in volume that dwarfs that strike's open interest of 707, clearly a new position.

This could be a new credit spread that would take in $1.22, which would be the profit if X is above $26 at expiration in mid-January. It could also be a roll, with the trader buying back short puts at the lower strike and rolling the position to the 26 strike. In either case the trader sees shares above $26 in coming months. (See our Education section)

X is up 2.9 percent to $25.59 this morning, its highest level since peaking in January. The steel maker's shares have run up from $17 in early August.

Roughly 77,000 X options have changed hands, 3 times its daily average in the last month.

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