Analyst: Peabody Energy Stock is a "Buy"

Options volume is running at five times the intraday average

Deputy Editor
Jun 7, 2022 at 1:50 PM
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Options traders are blasting Peabody Energy Corporation (NYSE:BTU) stock today, as the shares sit 8.7% higher to trade at $28.34 at the session's halfway point. The increased premium interest and positive price action follow an upgrade to "buy" from "hold" at Jefferies. The brokerage firm also increased its price target on the coal concern to $36 from $25, joining analysts weighing in on the energy sector as prices continue to climb.

In response, BTU's options pits have already seen more than 26,000 calls and 9,068 puts exchange hands today, or five times the intraday average. The most popular contract by far is the June 30 call, while the 25 call from the same standard series stands as the top open interest position.

A broader look shows short-term options traders favoring calls. Specifically, Peabody Energy stock's Schaeffer's put/call open interest ratio (SOIR) sits higher than just 8% of readings from the past year, indicating a call-bias amongst short-term options traders.

Options look like the move to make for those wishing to weigh in on the equity, as its Schaeffer's Volatility Index (SVI) of 89% sits higher than just 10% 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 94 out of 100, implying that the stock has exceeded said volatility expectations of late. 

Circling back to analyst sentiment, the few in coverage are bullish towards Peabody Energy stock at the moment. Of the three analysts that hold ratings, two recommend a "strong buy," with one "hold," and not a single "sell" on the books. What's more, short interest is up more than 7% in the most recent reporting period, and the 12.51 million shares sold short account for a healthy 8.8% of Peabody Energy stock's total available float.

On the charts, Peabody Energy stock is chasing its April 18, three-year high of $33.29. Despite a brief pullback in May, which was caught by the 100-day moving average, the security hold a massive 180.2% year-to-date lead. Further, thanks to five monthly wins in the last six, BTU stands nearly 270% higher in the last 12 months.


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