Call selling in A.K. Steel (NYSE: AKS)

A.K. Steel Holding Corp. (NYSE: AKS) options received a boost thanks to investors who traded a hefty number of in-the-money calls.

By 10 a.m. EST, nearly 10,000 June 22 calls had crossed the tape for the bid price of $3.10 per contract. The calls are home to current open interest of 18,000 contracts, which does not necessarily mean investors opened or closed a particular position, but two scenarios could have occurred: An investor could have sold these in-the-money (ITM) options to open calling for limited upside, and will make money on this call sale if AKS shares close lower than $25.10. Keep in mind that this trade factors in a possible 8% rally from the stock’s current level throughout the later-term, which is why this is a moderately bearish strategy (an exceedingly bearish strategy could be shorting ITM calls). This action could also be part of a buy-write strategy, in which an investor is long stock but hedges that bullish position by selling upside calls.

On the other hand, the action could suggest investors closed long call positions to prevent any additional losses. The investor might not have been convinced the stock could rally any higher throughout the near-term.

The June 22 calls are currently unchanged on the day, and have an implied volatility of 50%, compared to a 30-day historical volatility of 52%. AKS did not announce any news today, and the company is due to announce earnings on April 20 before the market opens. Analysts estimate earnings of 24 cents a share. AKS shares are currently trading down five cents to $23.35 so far this morning.

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