CONSOL Energy Inc. (CNX) Continues to Prove Skeptics Wrong

CONSOL Energy Inc. (NYSE:CNX) has put in a strong showing on the charts, yet the coal stock is surrounded by skeptics in and out of the options pits

by Karee Venema

Published on Dec 13, 2016 at 1:56 PM

Put buyers have set their sights on CONSOL Energy Inc. (NYSE:CNX) in recent weeks -- even with the energy stock fresh off an annual high. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for instance, CNX stock sports a top-heavy 10-day put/call volume ratio of 1.12. What's more, this ratio ranks in the elevated 82nd annual percentile, meaning puts have been bought to open over calls on CNX at a faster-than-usual clip of late.

Likewise, the security's Schaeffer's put/call open interest ratio (SOIR) is currently docked at 1.11. Not only does this indicate that puts outweigh calls among options set to expire in three months or less, but it rests above 93% of all comparable readings taken in the past year. Simply stated, short-term speculators are more put-heavy than usual toward CNX stock.

Echoing this, there are nearly 105,000 puts outstanding on CNX -- in the lofty 72nd percentile of its annual range. This is compared to 101,902 calls that are currently open on CNX, in the more tame 38th percentile of its 12-month range. And while the stock's January 2017 14 strike is home to peak put open interest of 10,353 contracts, the closer-to-the-money January 2017 19-strike put has seen the biggest rise in open interest over the past 10 trading sessions, with nearly 3,000 new positions added.

Given CNX's whopping 150% year-to-date gain, it's certainly possible some of the recent put buying is a result of shareholders protecting paper profits against a pullback. Regardless, there's plenty of skepticism to be found outside of the options pits, too. Specifically, short interest is up nearly 8% in the two most recent reporting periods, and these bearish bets now account for a lofty 16.4% of the stock's available float -- or 10 times CNX's average daily pace of trading.

With such high levels of pessimism swirling around the outperformer, it's likely CONSOL Energy Inc. (NYSE:CNX) is in a position to continue its run up the charts. In addition to the security's impressive technical showing in 2016, it tagged the $22.30 mark last Thursday -- its highest perch since June 2015. Additionally, although CNX stock was last seen trading down 1% at $19.72, a bigger intraday decline was earlier contained at the $19 level, home to the stock's 30-day moving average. Should the shares continue to bounce, an unwinding of skepticism both in and out of the options pits could create tailwinds for CNX.

cnx daily since december 2015

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