Options Brief: AK Steel Holding (AKS)

AKS – AK Steel Holding Corp. – Shares in steel producer, AK Steel Holding Corp., rallied as much as 3.65% during the first half of the trading session to secure an intraday high of $13.07. AK Steel’s shares are currently up a lesser 1.50% to stand at $12.80, which is still 52% below the stock’s 52-week high of $26.75, attained back on January 11, 2010. AKS shares currently stand 12.9% above the 52-week low of $11.34 reached on July 1, 2010, and options traders populating the stock today appear to be positioning for shares to continue to rebound in the next couple of months. Investors purchased roughly 4,500 calls at the September $14 strike for an average premium of $0.29 a-pop. Call buyers at this strike are poised to profit should AKS shares surge 11.6% over the current price of $12.80 to exceed the average breakeven point to the upside at $14.29 by September expiration. Optimism spread to the higher September $15 strike where bulls picked up approximately 2,200 calls at an average premium of $0.16 each. Investors make money if the price of the underlying stock jumps 18.4% to trade above $15.16 ahead of expiration day next month. Finally, bullish players purchased about 1,000 calls at the October $14 strike for an average premium of $0.63 apiece. Profits start to accumulate for traders long the October $14 strike calls as long as AK Steel’s shares surge 14.3% to surpass the average breakeven price of $14.63 by October expiration. The surge in demand for options on AKS helped lift the overall reading of options implied volatility on the stock 21.1% to 63.93% by 12:30 pm ET.

About Andrew Wilkinson 1023 Articles

Affiliation: Interactive Brokers

Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.

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