Call Traders React to Cleveland-Cliffs Acquisition

Calls are running at double what's typically seen at this point

Jake Scott

Deputy Editor

Oct 11, 2021 at 10:09 AM

Cleveland-Cliffs Inc (NYSE:CLF) is in the spotlight today, after announcing a new acquisition that will see the steel and iron producer enter the scrap metal business. Specifically, Cleveland-Cliffs will now be able to purchase scrap metal back from its clients, after it acquired Ferrous Processing and Trading in a deal worth roughly $775 million. The deal is expected to close in the fourth quarter of 2021.

At last check, CLF is up 4.7% at $21.60. The last time we looked into the equity, Cleveland-Cliffs stock had pulled back to the 160-day moving average, which previously launched the shares nearly 45% on the charts within a month. It remains to be seen if this will happen again, as CLF has meddled below the $21 for much of the time since, though it boasts a 41.7% year-to-date lead.

Call traders are tripping over themselves to get in on the action. In the first hour of trading, over 20,000 calls have crossed the tape so far -- double what's typically seen at this point -- in comparison to 4,845 puts. The October 22 and 21.50 calls are the most popular by far, hinting at the upside these traders see for Cleveland-Cliffs stock by the week's end.

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