Add X Puts

Another Downside Opportunity in US Steel

By Bryan Bottarelli
Monday, August 06, 2007 11:04 AM EDT
Mon, 6 Aug 2007 15:04:00 GMT

Dear Bottarelli Research Member,

I’d like to take a quick look at two of the top steel companies on Wall Street, starting with Nucor (NUE — NYSE). As you can see below, the stock penetrated its 200-day moving average and didn’t find a support point until it moved another 20% below this level.

NUE

I bring this to your attention because we could soon witness the same situation United States Steel (X – NYSE).As you can see below, shares of X just now busted the 200-day moving average, which means we could witness another 20% fall in the shares. Let’s play this fall using August puts. Here’s the play:

X

PLAY: Buy the X August 90 Puts (X TR) at or under $5.20, good for the day. Current bid/ask spread is $4.80 to $5.10. Place a protective stop limit at $2.90.

Let’s also go ahead and lock in gains on our BX September 25 Puts (BX UE). We entered these puts for $2.70 on July 30th and they’ve traded as high as $3.20 today, so let’s lock in this modest profit now.

PLAY: Sell your BX September 25 Puts (BX UE) at or above $3.10, good for the day.

Lock and load

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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