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Option Brief: Puts were once again the options of choice on Cliffs Natural Resources Inc (NYSE:CLF) yesterday -- trading at a 47% mark-up to typical daily levels, and outpacing calls by a 2-to-1 margin. However, nearly three-quarters of the day's put volume centered on two strikes, as one option trader readjusted her bearish bet, calling for more downside for the struggling stock over the next several months.
Shortly before noon ET on the NASDAQ OMX PHLX (PHLX), one massive block of 15,000 July 20 puts changed hands below the bid price, suggesting they were sold. Simultaneously, a symmetrical block of July 18 puts crossed closer to the ask price, indicating they were bought. Open interest dropped overnight at the higher-strike put, and rose at the lower-strike put, confirming the closing and opening of positions, respectively. In other words, this speculator rolled down her put position in the July series of options.
This bearish positioning toward Cliffs Natural Resources shouldn't be too surprising, considering the shares are off 28% year-to-date. In fact, Trade-Alert indicated the block of July 20 puts was initially purchased (to open) on Feb. 14. Since tagging an intraday high of $23.53 in that session, the stock has shed more than 20% to linger near $18.79.
These recent struggles come as weak economic data out of China sparks fear over demand for iron ore. Additionally, on Monday, Cliffs Natural Resources Inc (NYSE:CLF) closed south of $18 for the first time since July 19, after postponing its annual shareholders meeting due to an impending proxy fight.