Options Traders Blast Peabody Energy Stock After Earnings

Options traders are loading up on BTU calls today

Deputy Editor
Feb 10, 2022 at 10:24 AM
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Peabody Energy Corporation (NYSE:BTU) stock is on fire today, last seen 10.1% higher to trade at $14.94, after the coal mining company beat earnings and revenue expectations for the fourth quarter. Specifically, earnings of $3.93 per share on revenue of $1.26 billion trounced Wall Street's forecasts, as Peabody Energy revels in forward sales commitments thanks to strong market dynamics.

BTU's options pits have come to life in response. Already, 5,584 calls and 770 puts have been exchanged, volume that's nine times the intraday average. Most popular is the February 17 call, where new positions are being bought to open.

The penchant for calls is nothing unusual. This is per Peabody Energy stock's 10-day call/put volume ratio of 16.97 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than 92% of readings from the past year. 

A short squeeze could be helping fuel today's rally. Short interest is up nearly 30% in the two most recent reporting periods, and the 7.67 million shares sold short accounts for a healthy 6.1% of Peabody Energy stock's total available float.

A post-earnings volatility crush has made premium attractively priced. The equity's Schaeffer's Volatility Index (SVI) of 108% sits higher than just 27% of readings from the past year. This means options traders are pricing in relatively low volatility expectations at the moment. What's more, the stock's Schaeffer's Volatility Scorecard (SVS) stands at 86 out of 100, implying that the stock has exceeded said volatility expectations of late. 

BTU is trading at its highest level since October and now boasts an impressive 52.8% year-to-date lead. Prior to today's breakout, the shares'200-day moving average was a major source of potential upside. 


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