Call Buyers Hot on Steel Stock as Signal Flashes

Traders at the major exchanges have picked up long calls at a rapid pace

Data from the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows there's been unusual interest in long ArcelorMittal SA (ADR) (NYSE:MT) call options. The steel concern's 10-day call/put volume ratio comes in at 12.63, a reading that ranks in the bullish 97th annual percentile. In short, traders seem to be betting MT shares are going to keep rising. From a broader perspective, call open interest overall ranks in the 81st annual percentile.

A recent study from Schaeffer's Senior Quantitative Analyst Rocky White revealed strong technical support is in place for MT. The stock is currently within one standard deviation of its 80-day moving average, and four previous pullbacks of this type over the past three years have sparked a 21-day gain of 8.1%, on average.

Another move of this magnitude would have MT shares have near $17.60, back in positive year-to-date territory, based on their current price of $16.27. They'll need much more upside momentum to recoup all their losses from the past 12 months, however, as they've shed more than one-fourth of their value in that time.

For anyone looking to speculate on ArcelorMittal, near-term premiums look attractive at the moment. Take the equity's 30-day at-the-money implied volatility of 38.7%, which ranks in the 31st annual percentile, hinting at relatively low volatility expectations at the moment.