Today’s trade idea for option traders: United States Steel

options trade example

(Last Updated On: 27. January 2023)

My last trade on this company was in March 2022 which was a perfect one. During the bear market 2022 it was almost impossible to find good trade opportunities for options unless you would accept the stocks to get assigned. In 2023, the markets could recover and start a bull market. But in January 2023, it’s still not easy to find suitable trades for a good premium. But luckily, United States Steel is currently offering such a possibility. Hence, let’s check the facts!

Disclaimer:
The information I am giving you in this article is for informative purposes only and should not be treated as investment advice. It’s an options trade example, and the information presented would not be suitable for investors who are not familiar with exchange traded options. Any readers interested in trading activities related to the information in this article should do their own research and seek advice from a licensed financial adviser.


Source: tradingview.com

Type of a trade: Cash secured put
Expiration: 21st April (84 days)
Strike: $28
Premium for 1 option: between $193 and $200 on the day this article was published
Margin: apprx. $480 on the day this article was published (Please keep in mind: the margin size depends on your account size. The smaller your account size the higher the margin requirements. The margin I’m publishing here is the margin based on my account size. Therefore, it could also happen that with a small account, you would see a margin of more than $2000)

Pros for this trade

  • Based on the signal I get (ADX-Indicator), the price should continue to move at least sideways and to stay above the strike so we can get rid of the put option when the time is right
  • A solid giant with low risk of strong value loss and good chances you would get rid of this stock at decent levels if you should get assigned it

Cons for this trade:

  • An  IV Rank of around 11 and an IV Percentile of around 1% are playing against option sellers
  • The bear market could not be over and you should be prepared for this stock to get it assigned. A good money management and risk management is strongly recommended!
  • A pretty low dividend of around 0.69% is really mingy and that is actually not a stock investors should looking for in case the stock would get assigned
  • The Fear & Greed index of 70 is already in the greed zone which increases the risk of short term draw backs
  • The main con: As trading with options is also a dealing with probabilities, every single of my assumptions could turn out as a wrong estimation so at the end the stock could land in the money

Result of this trade: t.b.a
Realized profit for 1 option: t.b.a
Days in the trade: t.b.a


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