Wanted: Peabody Energy Corporation (BTU) Weekly Options

Call volume is accelerated, as Peabody Energy Corporation (BTU) bounces from 12-year lows

Digital Content Group
Feb 4, 2015 at 1:35 PM
facebook X logo linkedin


Yesterday, Peabody Energy Corporation (NYSE:BTU) gapped higher, after sector peer Arch Coal Inc (NYSE:ACI) posted a positive earnings report. Today, BTU is keeping this momentum alive -- as speculation over a potential strategic partnership overshadows the Department of Energy suspended funding of the FutureGen clean-coal project -- adding 2.7% to trade at $7.26. As such, calls are crossing the tape at levels five times what's normally seen at this point in the day.

Most active is BTU's weekly 2/13 7.50-strike call, followed by the weekly 2/6 7- and 7.50-strike calls. According to Trade-alert.com, new long positions are being opened here, meaning traders expect the stock to settle north of the strikes by the respective expiration dates.

Typically, traders have taken a bearish approach to BTU. For instance, at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 3.09 sits only 2 percentage points from an annual extreme, pointing to a much stronger-than-usual preference for puts over calls.

Outside the options pits, BTU is a favorite of short sellers. Roughly 20% of the stock's float is sold short, accounting for nearly a week's worth of pent-up buying demand, at average daily levels.

This pessimism seems to be well-deserved, as Peabody Energy Corporation (NYSE:BTU) has shed almost 55% on a year-over-year basis and hit a 12-year low just one week ago. The security's current rally attempt could be short-lived, as it's seeing overhead pressure from its descending 10-week moving average, which has acted as resistance in the past.

Weekly Chart of BTU Since February 2014 with 10-Week Moving Average
 

Unlock Weekend Profits with Chris Prybal's Favorite Strategy Up +487.5% in 2024

With the markets going left, right, and sideways, you need to have a plan now more than ever. 

Expert Trader Chris Prybal is no stranger to volatility, and has mastered finding big stock rallies while other traders aren't looking over the weekend. Rallies that produced gains like +207% on RTX calls, +236% on MARA calls, and +238% on NET calls.

A few simple moves on Sunday at 7pm could be the “Secret Sauce” your portfolio needs to not just stay afloat, but make unprecedented gains in this turbulent market.


Don’t sit on the sidelines, beat the market with Chris Prybal's strategy. Join him now!

 

 
 
 


 
 

Rainmaker Ads CGI