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This Stock is a Steel

Implied volatility on shares of MT is now low enough in January for me to recommend a small bullish call spread.

Ford (F) - Get Ford Motor Company Report made record profits. You read about it. You saw it and one of the OP contributors made a bullish call on it (which I liked). The stock was up $0.20. That's right, $20.00 on a round lot. It was a giant yawn by the market. What this underscores is the lack of liquidity that I have been noticing. There just is not enough money flowing into equities to buy companies making money. The crowd just buys Netflix (NFLX) - Get Netflix, Inc. Report or Chipotle Mexican Grill (CMG) - Get Chipotle Mexican Grill, Inc. Report because it is safe (?) at 50x forward P/E (give or take). Both of those are great companies but I look for value. I am looking to the January cycle, waiting for some money to come back into the market and make some of these value stocks shine. Let's find a trade to benefit from that.

I have a couple of more posts most likely in Aqumin's AlphaVision Landscape that focuses on EPS Surprise. Earnings season is creating lots of opportunity after the fact for me, because it sets up buying plays. Look below at ArcelorMittal (MT) - Get ArcelorMittal SA Report, the big green building in the Materials General Industry Classification System (GICS) that reported.

ArcelorMittal (MT) EPS Surprise

Source: Aqumin

View Chart

EPS surprise (according to


) for MT is #1 for the group (its position in the lower left corner denotes the relative size of the EPS surprise, as in big). And of course MT sold off. I have been watching this name for an option entry point because it dove tails with my take on the

Direxion Daily Emr Mkts Bull 3x Shs ETF

(EDC) - Get Direxion Daily MSCI Emerging Markets Bull 3x Shares Report

(I have been continually rolling a


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in there). The emerging markets are growing and MT is there. MT is not the revenue titan it once was (also not trading $100.00 like it was either), but has weathered things pretty well. The implied volatility is now low enough in January for me to recommend a small bullish call spread (high 30s in implied volatility).

Trades: Buy to open 3 MT January 32.5 calls for $2.74 and sell to open 3 MT January 35 calls at $1.56

The net debit is $1.18 on a 17 delta with MT trading at $32.93 or better.

At the time of publication, Andrew Giovinazzi held no positions in the stock or issues mentioned.

Andrew is the Executive Vice President of Business Development for Aqumin, where he participated in the design team to apply AlphaVision to the financial markets. For 15 years he was a member of the Pacific Exchange and the Chicago Board Options Exchange, where he actively made markets and traded in both equity and index options.

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