Investor perhaps has bullish expectations at General Steel

Today’s tickers: GSI, BRCM, MAS, TGT, GE, AMZN & XOM GSI – General Steel Holdings Inc. – It appears that a trader may have used the options market to seek protection against a possible long stock position in GSI, a manufacturer of hot rolled carbon and silicon steel sheets today. The trade involves short calls expiring in September and long puts expiring in June. With shares trading at $3.00 today this option strategy combined with stock would offer capital appreciation of 66% should shares rise to the call strike, where gains would be capped from the offsetting short call. But the strategy would also offer limited downside risk to a long stock play with the net premium of 15 cents creating a breakeven point of $2.35. That exposes the investor to a maximum loss on the stock of 21.6%. Some 6,400 June puts were bought at the 2.5 strike price for 70 cents, while 6,400 calls appear to have achieved a premium of 55 cents using the September contract. Without an underlying stock position the investor wants shares to fall beneath the $2.35 breakeven and so is subsidizing the put cost. However, the fact that the September calls were sold leaves the investor exposed to a maturity gap of three months, which is why we speculate that the investor is actually pinning hopes on a rebound in the stock much later this year. BRCM – Broadcom Corp.-CL A – The Irvine, CA based chip-designer reported fourth quarter losses and announced that sales projected through the end of March will likely fail to meet analysts’ expectations. The company faced a downgrade today while its share price suffered falling 9% to $15.86. BRCM approached the top of our ‘hot by options volume’ market scanner and revealed some interesting trades. At the February 13 strike 4,980 puts were purchased for 10 cents each. At the February 15 strike 4,450 puts were sold for a premium of 45 cents while about 1,100 were bought at that same strike for 40 cents apiece. The March contract at the 15 strike price was where the big news is today with 17,000 puts changing hands with approximately 10,700 puts sold for 85 cents each while a buyer paid 95 cents for 4,400 lots. In the May puts at the 16 strike, 6,000 lots were sold for 1.82. While most of the option activity today was on the put side there…