TheStreet.com's Jim Cramer says U.S. Steel is a puzzle, and he ponders how to play it here.

U.S. Steel (NYSE: X) (Cramer's Take) presents the ultimate conundrum. It is hitting on all cylinders, courtesy of the incredible demand for steel domestically because of pipelines. And it is finally not suffering from dumped imports, because the dumpers are from countries growing so much faster than we are that they need all the steel they can get - China, for example, is struggling to build its own share instead of dumping.

John Surma, the CEO, has taken this once-great company right back to greatness with a rise from $9 to $127 in five years. That defies gravity. He has done that by cutting labor costs and growing the business, he has done it by emphasizing areas he can dominate and cutting ones he can t. And he has done it by taking advantage of the 30 bankruptcies in this sector, leaving him one of the few publicly traded companies left, including Nucor (NYSE: NUE) (Cramer's Take), which is a great company, AK Steel (NYSE: AKS) (Cramer's Take), which levitates all of the time on takeover talk and then DOESN'T come in, and Reliance (NYSE: RS) (Cramer's Take), which is another fave of mine.

United States Steel Corp. (NYSE: X) opened at $109.30. So far today the stock has hit a low of $107.80 and a high of $109.31 As of 10:55, X is trading at $108.06, down $2.01 (-1.8%).

The stock has been rising steadily in recent months, hitting a one-year high of $113.84 last week. US Steel has priced $1.1 billion of senior unsecured notes to redeem higher interest currently outstanding notes due in 2010 and to finance part of its Lone Star Technologies acquisition. Recent technical indicators for X have been bullish but deteriorating slightly, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.

For a bearish hedged play on this stock, I would consider a July bear-call credit spread above the $115 range. X has not been above $115 ever and has shown resistance around $112. This trade could be risky if the economy sparks to life again, but even if this happens, the stock would have to rise by 20.1% before we would be in trouble. Plus, X is not expected to report their next quarter's results until late July after expiration.

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 a position in X.

Volatility Index S&P 500 Options-VIX down 0.69 to 14.45

Dendreon-(NYSE-DNDN) spreaders active on differentiated option prices on FDA Advisory. DNDN is recently up $8.78 to at $13.91. The FDA Advisory Panel say's DNDN's Provenge is safe for prostate cancer and recommended the agency approve the treatment. DNDN Provenge has a May 15th PDUFA date. McAdams Wright Ragen say's "it remains uncertain whether the FDA will want to see results of the ongoing IMPACT study, due to be completed in 2010, before granting approval." DNDN call option volume of 76,792 contracts compares to put volume of 56. ,655 contracts. DNDN April option implied volatility is at 150, May is at 200 & August is at 130 according to Track Data. DND puts are bid higher than calls because DNDN is difficult to borrow.

Note: The Daily Option Update is provided by Stock Options Specialist Paul Foster of theflyonthewall.com.

Option volume leaders today are: U.S. Steel (NYSE-X), Dendreon (NASDAQ-DNDN) and Sunocor (NYSE-SUN).