Traders are looking for a rebound in ArcelorMittal, which has been struggling amid a global glut in steel and weak economic conditions in Europe.
More than 3,300 July 15 calls were bought for $0.18 to $0.20 on Friday in volume far above the strike's open interest of just 707 contracts, indicating that these are new positions, according to optionMONSTER's Heat Seeker tracking system. In addition, about 1,500 August 16 calls were bought for $0.13 against open interest of 364 contracts.
These long calls lock in the price where the stock can be purchased no matter how far it might climb. They could be sold before expiration at a profit if premiums rise with a rally before then, providing potentially significant leverage, but the contracts will quickly lose value if shares continue to fall. (See our Education section)
MT was down 0.6 percent on Friday to end the week at $14.81. The Luxembourg-based steel maker was trading near $17 in early April but has been trending lower since, receiving a Goldman Sachs downgrade to "sell" from "neutral" last month.
Friday's total option volume in ArcelorMittal was nearly triple its daily average for the last month. Overall calls outnumbered puts by 16 to 1, a reflection of the session's bullish sentiment.
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