A Look Inside This Massive Trade on Cliffs Natural Resources Inc (CLF)

Cliffs Natural Resources Inc (CLF) saw a block of 18,000 puts bought to open earlier

by Digital Content Group

Published on Jan 15, 2015 at 2:54 PM
Updated on Jun 24, 2020 at 10:16 AM

Cliffs Natural Resources Inc (NYSE:CLF) is surging today, up 11% at $8.65 amid a sector-wide rally. Meanwhile, options are trading at nearly triple the typical intraday pace, and the stock's 30-day at-the-money implied volatility has popped 4.4% to 97.6% -- in the 92nd annual percentile.

Probing more deeply, CLF's most active option by a mile is the soon-to-be front-month February 9 put. A block of 18,000 contracts was apparently bought to open at the in-the-money strike, though Trade-Alert indicates these options were married puts, tied to the purchase of more than 1 million shares of CLF stock.

In any case, the massive put buy is unusual, relatively speaking. During the last two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), CLF has racked up a call/put volume ratio of 1.57 -- higher than 81% of similar readings from the previous 12 months. However, with 52% of the stock's float sold short, a portion of these bearish bets may have been initiated by short sellers hedging.

Turning back to the charts, today's rally has Cliffs Natural Resources Inc (NYSE:CLF) up more than 21% in 2015. Longer term, however, the technical picture is bleak, with the stock off 45% year-over-year.


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