Put Volume Picks Up as Cliffs Natural Resources (CLF) Plunges

Cliffs Natural Resources Inc (NYSE:CLF) has plunged 5.7% this afternoon to churn near $6.26 -- as fear over an impending interest-rate hike sparks a sell-off in mining and precious metal names. Against this backdrop, CLF puts are crossing at a rate 1.4 times what's typically seen at this point in the day, and are outpacing calls by a 2-to-1 margin.

Drilling down, CLF's weekly 3/6 6.50-strike put is being bought to open, as traders bet on the stock to extend its decline south of the strike through tonight's close, when the series expires. Meanwhile, new positions are also being purchased at the equity's weekly 3/13 6.50- and weekly 3/27 6-strike puts.

Heading into today's session, speculators at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) had shown a distinct preference for calls over puts in recent months. Specifically, CLF's 50-day call/put volume ratio of 1.87 across these exchanges ranks higher than all other similar readings taken in the past year, meaning calls have been bought to open over puts at an annual-high clip.

Looking at the charts reveals today's skeptical stance among options traders more closely aligns to the equity's longer-term technical backdrop. On a year-over-year basis, the shares have surrendered roughly two-thirds of their value. Considering almost half of Cliffs Natural Resources Inc's (NYSE:CLF) float is sold short, a portion of the recent call buying -- particularly at out-of-the-money strikes -- could be a result of short sellers hedging against any unexpected upside.