U.S. Steel Takeover Talk Drives Options

Bullish options activity has spiked for AK Steel on rumors that it might be taken over by United States Steel.

AKS calls were 153 percent of normal volume, as 12,000 had traded against just 2,400 puts by the last hour of Friday's session, according to OptionMonster's tracking systems. At the same time, U.S. Steel saw 14,000 puts trade at its March 20 strike.

AK Steel has been the subject of other takeover talk in recent months, including December rumors that mentioned Japan's Sumitomo Metals as a possible suitor. But given that arbitrageurs typically get short the buyer and long the object of desire in acquisitions, the X puts and AKS calls make the U.S. Steel buyout rumors all the more interesting.

AK Steel had dipped early this month after Goldman Sachs removed the company from its Conviction Buy List, but since then AKS shares have been generally trading higher and ended Friday up 5 percent to $9.11. U.S. Steel stock had been following roughly the same path but fell 2.95 percent Friday to $30.61.

Other Major Steel Makers:

Nucor NUE

Posco PKX

Arcelor Mittal


Jon 'DRJ' Najarian is a professional investor, CNBC contributor, and cofounder of OptionMonster.com.