Saturday, June 9, 2007

US Steel (X)

This could be a bad thing for X shares which surged on speculation that it could be a takeover target if Thyssen and Severstal merged: Severstal chief denies sale talks with ThyssenKrupp. I am holding X puts following a fast buy and sell of calls on Friday because the surge on Friday seemed to be a repeat of merger speculation that never panned out late last year (fool me once shame on me....). C'mon, a German/Russian steel combo that's going to buy U.S. Steel? Yes, I think JP Morgan and Andy Carnegie were both rolling in their graves on Friday. LOL.

While it was all well and good to do a long call scalp on X, the manipulation stinks - just stinks. I am wondering which hedge fund needed to get out in the $120s in a hurry, or who needed the stock up big a week before June options expiration? What was especially damning, was the fade in implied volatility in the final half hour of trading in the X options. I'd say there's about a ZERO percent chance we see a U.S. Steel deal on Monday. Unless something else comes along that can replace the now dead Thyssen rumor, this stock is headed back to the one-teens - perhaps around its 10 dma at about $115.

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