The Story Behind Nucor's Steel Strength

What the Options Market Tells Us About Nucor

March 25, 2023

The options market can provide valuable insights into the sentiment and expectations surrounding a particular stock. In the case of Nucor (NUE), the options market is telling us a few key things about the steel giant.

First and foremost, the options market is indicating a strong bullish bias towards Nucor. The majority of the options activity is centered around calls, with the most active strike price being the $50 level. This suggests that a significant number of traders are betting on Nucor's stock price to continue its upward trend.

Another interesting trend in the options market is the lack of put activity. Typically, when a stock is experiencing a significant decline, we would see an increase in put buying activity as traders look to hedge their positions or bet on further declines. However, in the case of Nucor, the put activity is extremely low, suggesting that even the most bearish traders are not expecting a significant decline in the stock's price.

The options market is also telling us that the street is expecting Nucor's earnings to be strong. The implied volatility in the options market is relatively low, which suggests that the market is expecting Nucor's earnings to be in line with or slightly above expectations. This is in line with the company's recent performance, which has seen a significant increase in earnings per share over the past year.

Finally, the options market is telling us that the street is not expecting a significant move in Nucor's stock price in the near term. The options market is pricing in relatively low volatility over the next 30 days, which suggests that traders are not expecting a significant move up or down in the stock's price.

Overall, the options market is telling us that the street is bullish on Nucor, expects strong earnings, and is not expecting a significant move in the stock's price in the near term. This information can be used to inform investment decisions and provide a more complete picture of the market's sentiment towards Nucor.