Updated 3/23/2018: X as it turned out was a play dependent upon the rhetoric and actions in Washington and capitals of the major powers more than on the risk/reward analysis I bring to my trades.
The steel company’s shares fell sharply with the broad markets after the U.S. president announced tariffs globally on steel and aluminum, recovered less than the markets as a whole in response to the decline, and then fell sharply on March 22, a day before my exit, as the U.S. announced tariffs on China
The decline continued the next day, and I exited late in the day as my profits reached 53.8% of their potential maximum. I exited for a debit of $0.36 on the options spread with shares at $34.22.
At exit, shares had declined 12.8% over nine days, for a -519% annual rate. The options position produced a 102.8% return for a +4,168% annual rate
I have entered a short vertical spread on X, using options that trade for the last time 65 days hence, on May 18. The premium is a $0.78 credit and the stock at the time of entry was priced at $39.24.
I made the decision to enter the trade in my account based on expectations of a negative earnings surprise as reported by Zacks, a downtrend signal on the Fisher Transformer and a bearish Elliott wave analysis. My view of the markets is that they have been in a significant downtrend since the Jan. 26 peak, and so I chose to trade a symbol with bearish metrics.
X publishes earnings on April 24 after the closing bell.
Tim Bovee, Private Trader 
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