Earnings Miss Sinks Cleveland-Cliffs Stock

Options traders continue to take a bullish stance, however

Digital Content Manager
Feb 11, 2022 at 10:10 AM
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The shares of Cleveland-Cliffs Inc (NYSE:CLF) are down 5% at $19.90 after reporting fourth-quarter earnings of $1.69 per share on $5.35 billion in revenue, both of which missed analysts' estimates. The firm also announced a $1 billion share buyback program. 

A look back at CLF shows the stock staging a rebound off its $16 level late last month, though pressure at the 200-day moving average stopped this rally in its tracks earlier in the week. The $16 level could still serve as a floor going forward, as it also helped capture a pullback last April, and CLF is up 20.3% year-over-year. 

Analysts have yet to chime in, but were split on the stock heading into today. Of the six in coverage, three say "strong buy," and three say "hold." Meanwhile, the 12-month consensus price target of $29.01 is a 44.6% premium to current levels. 

Options traders took a bullish stance ahead of the company's report. This is per CLF's 10-day put/call ratio of 6.63 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than 75% of readings from the past year. In other words, long calls are being picked up at a quicker-than-usual clip. 

Today's options activity reflects this, with 60,000 calls exchanged so far, compared to 16,000 puts. Total volume is running at four times the intraday average, and the weekly 3/4 21.50-strike call is the most popular, followed by the February 20 call. Positions are being opened at the former. 

 

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