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Why puts are surging in U.S. Steel

Chris McKhann (chris.mckhann@optionmonster.com)

A large put trade tops today's option activity in U.S. Steel as it reaches new 10-year lows.
optionMONSTER systems show that a trader sold 5,000 October 16 puts for the bid price of $1.74 in volume below open interest of more than 23,000. At the same time, he or she bought 7,500 October 14 puts for $1. The open interest there was just 141, so that was a new position.

This could be a backspread , which would suggest that the trader is betting that X will remain above $16 or fall sharply. But it is quite likely that the trader is rolling a long-put position lower while increasing the size of the put position and taking a bit of money off the table. That could be a straight bearish play or a hedge against long shares . (See our Education section)

X is down 0.36 percent this morning to $16.57, which would be its lowest close since 2003. Shares were above $26 at the beginning of this year.  

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