USX1 trade ideas
See The Target: $X Still Has More UpsideUnited States Steel Corporation (NYSE:X) jumped on Monday and is setting up for a great day on Tuesday. After announcing a $0.05 dividend, the stock is in a perfect spot to continue its run higher. In addition, Donald Trump will be giving a speech Tuesday night where he will likely talk up buying American produced steal. When looking at the stock chart, all signals point to continued upside through $40 to a high between $45 and $47. This was the high from 2014 and will be significant resistance. Only at this point should investors consider selling the stock.
United States Steel Corporation likely to trader higher
US Steel up for resistanceUS Steel is in a nice uptrend since setting the bottom in early 2016. The current uptrend is likely to remain. Recently a long term declining resistance line has been broken (the red dotted line) which had been tested late 2016. After a short pullback the stock price continues its uptrend. Both the MACD and RSI show signals for further advancing of the stock price, both curling up after setting a higher bottom. First potential resistance is the last major top, set in September 2014, around 46. This level is also the 61.8% retracement level formed from the major top around 70 to the bottom in 2016.
I have no position in X, and would be hasitant to enter a long position below 46. After breaking the resistance at 46 (significantly) I would consider a long position.
X EARNINGS SHORT STRANGLE/IRON FLYX announces earnings tomorrow (Tuesday) after market close, and with its implied volatility rank and implied volatility metrics, it's ripe for a volatility contraction play. Here are two possible setups, which naturally might need to be tweaked this way or that depending on price movement intraday tomorrow.
Feb 17th 29/38 Short Strangle
Metrics
Probability of Profit: 68%
Max Profit: $130/contract
Buying Power Effect/Max Loss: Broker Dependent/Undefined
Break Evens: 27.70/39.30
Notes: (1) Here, as is my habit, I'm selling the 20 delta call and put. (2) I went out a little bit farther in time to the monthly, since things are generally more liquid there, so I would be more likely to get a fill at the mid without too much diddling around. (3) Look to manage at 50% max profit or about $65/contract.
Feb 17th 25.5/33/33/41 Iron Fly
Metrics:
Probability of Profit: 50%
Max Profit: $392/contract
Max Loss/Buying Power Effect: $408/contract
Break Evens: 29.08/36.92
Notes: (1) The first thing I did was check to see what a three-wide iron condor would pay with the short options at the 20 delta strikes. It was less than 1/3rd the width of the strikes, so I switched to putzing with a fly. (2) Look to manage this setup at 25% max profit (~$98/contract). (3) While the setup looks "sexier" from a max profit standpoint, you'll also notice that the profit zone is narrower than that of the short strangle. Nevertheless, is defined risk going in, so I know what my max loss is if the thing blows up in my face.
