Schaeffer's Trading Floor Blog
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Momentum names that made notable moves on Monday and could continue to do so into Tuesday's session include airline operator Southwest Airlines Co. (NYSE:LUV), petroleum refiner Valero Energy Corporation (NYSE:VLO), and mining company Cliffs Natural Resources Inc (NYSE:CLF). Here is a quick look at these stocks ahead of tomorrow's opening bell.

Southwest Airlines Co. (NYSE:LUV)

Southwest Airlines' positive traffic report for February sent the shares flying to a record intraday high of $23.67, though the stock scaled back its gains to 2.2% to close at $23.60. Option traders responded to the good news, picking up calls at about four times the average daily pace. By the end of the session, calls outnumbered puts by a margin of more than 5-to-1. This preference for calls over puts represents a change of pace in LUV's options pits, particularly among short-term speculators. The equity's Schaeffer's put/call open interest ratio (SOIR) of 1.42 ranks higher than all comparable readings from the past year, meaning put-heaviness among short-term option traders is at an annual high, relatively speaking.

Valero Energy Corporation (NYSE:VLO)

Valero Energy spiked to a six-year high of $53.92, after receiving a price-target hike to $44 from $40 at RBC this morning. So far this month, the stock has performed well, already climbing 11.4% to trade at $53.47. Nevertheless, VLO saw heavier-than-usual put activity in its options pits today, with these contracts outnumbering calls by a margin of roughly 3-to-2. Particularly, weekly 3/14 52-strike puts were in focus, as speculators bet on the equity's direction through week's end.

Cliffs Natural Resources Inc (NYSE:CLF)

Cliffs Natural Resources dropped 3.8% today to close at $17.95, after the company on Friday postponed its annual shareholder meeting, due to an ongoing feud with New York hedge fund Casablanca Capital LP. As such, the stock is now facing a year-to-date deficit of 31.5%. Option traders responded by swiping up more than two times the expected daily amount of puts. In fact, these options accounted for eight of the day's 10 most active strikes. This bearishly skewed activity is just more of the same on CLF, as the stock's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 1.08 ranks higher than all similar readings from the past 12 months. In other words, speculators have bought to open puts over calls at an annual-high rate of late.


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