US Steel (X) 2/8/10 PriceWatch Alert Bearish Price Movement

Posted: Monday, February 08, 2010 8:44 AM EDT
By: Market Intelligence Center Staff

US Steel (NYSE: X) ended the last trading session at $44.78. So far the stock has hit a 52-week low of $16.66 and 52-week high of $66.45. US Steel stock has been showing support around 41.47 and resistance in the 46.49 range. Technical indicators for the stock are Bearish and S&P gives X a weak 2 STAR (out of 5) sell rating. X appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at an Apr '10 42 covered call for a net debit in the $39.03 area. That is also the break even stock price for this trade. This covered call has a 68 day duration, provides 12.84% downside protection and a 7.61% assigned return rate for a 40.85% annualized return rate (comparison purposes only). A lower cost hedged play for this stock would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the X Jan '11 17.50 Call and selling the Apr '10 42 call for a $21.90 debit. The trade has a 68 day life and would provide 12.01% downside protection and an 11.87% assigned return rate for a 64.00% annualized return rate (for comparison purposes only). US Steel has a current annual dividend yield of 0.43%. [ABR-Seven Summits Research]