Alcoa Inc (AA) bears are buying weekly put options after the latest analyst notes
It's a proverbial "Groundhog's Day" for Alcoa Inc (NYSE:AA). After surrendering 3.9% on the heels of a bearish brokerage note yesterday, the shares -- along with sector peer Century Aluminum Co (NASDAQ:CENX) -- are once again trading lower on negative analyst attention. AA has given up another 1.9% to linger near $14.32, after Morgan Stanley and Deutsche Bank cut their respective price targets to $18 and $19. What's more, option traders are upping the bearish ante, gambling on even more downside for AA by tomorrow's close.
Intraday put volume is running at seven times the average pace, and is outpacing AA call volume by a margin of nearly 3-to-1. Most active are the weekly 3/6 14- and 14.50-strike puts, which buyers are opening amid expectations for AA to extend its retreat beneath the strikes through the end of the week, at which point the options expire. The stock hasn't ended a session south of $14 since June, as this neighborhood has emerged as support during the past few pullbacks.
Despite the Alcoa Inc's (NYSE:AA) struggles -- the shares are down more than 9% year-to-date -- there's still plenty of room on the bearish bandwagon. The stock's Schaeffer's put/call open interest ratio (SOIR) of 0.56 stands higher than just 26% of all other readings from the past year, suggesting short-term traders are more call-heavy than usual. Likewise, nine out of 15 analysts maintain "buy" or better endorsements, and the consensus 12-month price target of $18.96 sits in territory not charted since October 2008.