Nucor Stock has been in my portfolio for many years. It has been an excellent Put Selling performer. This steel company has had a tough time since the market crash in 2008. Nucor stock has never recovered its highs from 2006 to 2008 which is a signal that this stock is not for holding.
I trade through Put Selling Nucor stock because of the volatility which keeps option premiums decent and because the stock stays largely in a definable range. But Nucor stock requires watching in order for Put Selling to be successful. Recent earnings per shares was $1.58, a decrease of almost 20% from the previous year. As well Nucor is not growing its revenue and losing market share, never a good sign. By remaining careful and using technical timing tools to keep a watchful eye when put selling, I have done well in Nucor stock since 2009.
I believe Nucor Stock has a good chance of a bounce from the rebuilding that will be necessary following hurricane sandy.
Nucor Stock Chart
In my article on October 30 looking at Nucor Stock I discussed the $36 put strike. However on Thursday I did not find the premiums warranted the risk of capital. I therefore sold 5 naked puts at the December $38 put strike for .72 cents. The $38 strike has good support and if the stock falls back I will buy to close the $38 put strike and roll down and out into January at $36.
Nucor Stock chart August to Nov 2012
Nucor Stock Outlook
Nucor Stock had a very good bounce the following day on November 1, but on November 2 it gave a lot of that bounce back. I do not believe Nucor stock should be held for any medium or long-term positions without protection through purchasing puts or selling in the money covered calls. Nucor stock is volatility and can easily fluctuate widely in a single day. I would not consider Put Selling Nucor Stock without a solid plan for handling possible assignment should the sold puts end up in the money.
Select this link to view all stock and option trades in my USA Portfolio for 2012.