Cleveland-Cliffs Stock Adds 10% on Higher Annual Fixed Prices

Options players are targeting CLF at an elevated clip today

Deputy Editor
Dec 22, 2022 at 10:36 AM
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Higher annual fixed prices for steel are boosting shares of Cleveland-Cliffs Inc (NYSE:CLF), which now stand 10.1% higher to trade at $16.66.

The steel maker said it will achieve these prices in the calendar year 2023, and anticipates an average selling price of $1,400 per ton, compared to $1,300 in 2022. The company also said that it expects "significantly lower" steelmaking unit costs. 

Options traders are taking note. Cleveland-Cliffs stock's normally quiet options pits have already seen more than 21,000 calls and 5,110 puts exchange hands, which is seven times the intraday average volume. The weekly 12/30 and 12/23 17-strike calls are the two most popular contracts, respectively, and new positions are being opened at both.

Today's call buying is in stark contract to the norm. While calls volume is still outnumbering puts on an overall basis, CLF's 50-day put/call ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits in the 91st percentile of annual readings.

Echoing this, Cleveland-Cliffs stock's Schaeffer's put/call open interest ratio (SOIR) of 0.71 stands higher than 82% of reading from the past 12 months. In other words, short-term options traders are heavily put-biased.

Now could be the time to join these traders, as CLF's options can be had for a bargain. This is according to its Schaeffer's Volatility Index (SVI) of 54%, which sits in the 18th percentile of its 12-month range, which indicates options players are pricing in relatively low volatility expectations right now. What's more, the security tends to outperform said volatility expectations, according to its Schaeffer's Volatility Scorecard (SVS) rank of 92 (out of a possible 100).

From a technical standpoint, Cleveland-Cliffs stock has underperformed on a year-to-date basis. The equity sports a 24.2% year-to-date deficit, while the SPDR S&P 500 ETF Trust (SPY) is 19.6% lower in the same timeframe. 


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