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Buy Arcelor Mittal (MT) On Options Activity

May 30 2008

Buy Arcelor Mittal (MT) On Options Activity 

            On a day when the European Steel Industry Group Asked the European Union to block a merger between BHP and Rio Tinto, investors created an unusually high amount of Call options volume on Arcelor Mittal (MT). We saw strong volume at four strike prices in the front month of June. Volume for the $65 strike price finished the day at 20,204 with the next three high strike prices of $70, $75, and $80 showing even stronger volume of 61,104, 77,504 and 43,000 respectively.

            The stock itself is quite attractive reaching a new 52 week high on the 19th of May and staying in a tight range near that high since. The analysts that cover the stock feel good about the company’s earnings which are to be released on the 30th of July. The stock currently has a trailing price/earnings ratio of 13.32 with a nice 21.8% revenue per share growth rate for the quarter year-over-year. I would be a buyer of the stock up until the earnings report but take any profits a couple of days prior. There could be a few bumps in the road as steel prices may fluctuate while you hold the stock for the next two months. For best results wait the price of the stock to drop a couple of percentage points at an open.

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