Nucor Corp. (NYSE: NUE) opened at $61.05. So far today the stock has hit a low of $61.05 and a high of $62.49. As of 10:55, NUE is trading at $62.46, up $2.38 (4.0%).

After hitting a one year high of $69.93 on June 1, the stock dropped sharply over the next four weeks before rebounding at the end of the month. NUE is jumping this morning as a buyout in the sector is lifting all the steel stocks. Gerdau Ameristeel (NYSE: GNA) announced yesterday after the close that it will buy Chaparral Steel (NASDAQ: CHAP) for $4.22 billion. Technical indicators for NUE are bearish and steady, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

For a bullish hedged play on this stock, I would consider an August bull-put credit spread above the $55 range. A bull-put credit spread is an options position that combines the purchase and sale of call options to hedge risk and leverage returns. For this particular trade, we will make a 9.9% return in less than 2 months as long as NUE is above $55 at August expiration. NUE would have to fall by more than 11% before we would start to lose money.

NUE hasn't been below $55 for more than a few days since October and has shown support around $57 recently. This trade could be risky if the company's earnings (due out July 19) disappoint, but even if that happens, it looks like this position could be protected by some support the stock has around $55.

Brent Archer is an options analyst and writer at Investors Observer. DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in NUE, CHAP, or GNA.

Each year Steven Halpern, editor of TheStockAdvisors.com, surveys the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is part of his 24th annual Top Picks Report.

Stock split expert Neil Macneale looks to the steel industry for both of his picks for 2007; Steel Dynamics (NASDAQ: STLD) is his top conservative investment while Chaparral Steel (NASDAQ: CHAP) gets the nod as his favorite speculation.

The editor of 2-for-1 explains, "As a group, stocks that have split have been found to outperform the market and, by investing only in splits, the portfolio is exploiting that anomaly. Our model portfolio is 'laddered' by buying and selling one stock each month, thus keeping the portfolio constantly at 30 stocks.

"Several steel companies and mining companies have announced splits in the recent months. Steel is historically a cyclical business, but the U.S. economy is strong at the moment, and should only get stronger as the housing sector recovers.

"In addition, U.S. steel companies now have pricing power they haven't enjoyed for decades, due to demand in Asia for their own locally produced steel. For these reasons steel, in general, should have a good run for the next year or two, and two companies, in particular, are well positioned to lead the pack.