AK Steel Options Surge Higher

AK Steel Holding Corporation (AKS) shares surged higher Thursday after reports surfaced that the company has been involved in early talks with multiple parties regarding a possible sale. Options on the stock surged higher with over 20,000 contracts changing hands in heavy trading. The most active options were the 60 September ‘08 calls set to expire in 50 days, followed by the 60 August ‘08 calls set to expire in just 15 days.

The options trading suggests that AK Steel shares will hit $66 over the next 15 days and continue to rise above $70 over the next two months. Of course, whether or not this happens depends on the reliability of the sale rumors. According to those close to the situation, the company has been informally on the block for several months and is interested in an all-cash transaction. AK Steel, however, refused to comment on the rumors.

Experts warn that this isn’t the first time that AK Steel has been exploring a sale, however. The Ohio-based steelmaker has continuously been the target of takeover rumors that haven’t produced any tangible offers. The Financial Times also reported that a second source said the company’s bankers were “teasing the crowd with a very unrealistic price tag”. However, ThyssenKrupp and Evraz have reportedly been taking a very close look at the company.

AK Steel Holding Corporation is a producer of flat-rolled carbon, stainless and electrical steels and tubular products through its wholly owned subsidiary, AK Steel Corporation (AK Steel and, together with AK Holding, the Company). Currently, shares in the company are trading at around $62 per share, which remains well off of its 52-week high of over $73 per share.

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