United States Steel Corp. (NYSE: X) stock is trading lower with other steelmakers that AM after the Commerce agency reported that inflation-adjusted consumer spending was unchanged in January. that has investors worried that a consumer pullback could weaken the economy further, cutting demand for steel. whether you think that stock won’t be rising too far in the coming months, next it could be a good date to look at a bearish hedged play on X.

After hitting a one-year high of $127.26 in June, the stock hit a one-year low of $74.41 in August. that dawn, X opened at $113.50. So far nowadays the stock has hit a low of $108.76 and a high of $113.75. As of 11:20, X is trading at $109.21, down $5.79 (-5.0%). The chart for X looks neutral and improving, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.

For a bearish hedged play on that stock, I would consider an April bear-call credit spread above the $140 range. A bear-call credit spread is an

options position that combines the purchase and sale of shout options to hedge risk in case the stock doesn’t do what you think but still leverage nice returns. For that specific trade, we will assemble a 4.2% return in two months as expanded as X is below $140 at April expiration. US Steel would have to rise by more than 27% before we would start to lose money.

X hasn’t been above $130 at all in the past year and has shown resistance around $121 recently. that trade could be risky whether the economy picks up and demand for steel rises, but even whether that happens, that position could be protected by resistance X might find amidst $120 and $130, where the stock has topped out twice in the past year.

Brent Archer is an options analyst and writer at Investors Observer. At publication date, Brent neither owns nor controls positions in X.

Original post by Brent Archer

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