Cliffs Natural Resources Inc. (CLF) Option Bull Keeps the Faith

Cliffs Natural Resources Inc (CLF) hit a fresh 11-year low earlier

Mar 18, 2015 at 2:32 PM
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Options activity has picked up speed on Cliffs Natural Resources Inc (NYSE:CLF) this afternoon, with overall volume at four times the expected intraday amount. By the numbers, puts have the slight edge over calls, with 28,000 of the former, and 23,000 of the latter, on the tape at last check.

Most active is CLF's April 5 put, and according to Trade-Alert, it appears a number of these speculators are closing out of their now in-the-money bets. Meanwhile, the stock's May 6 call is the second most active option, due largely to two massive blocks totaling 17,000 contracts that Trade-Alert suggests were bought to open. By purchasing the calls, the trader expects CLF to reclaim its perch atop $6 by the close on Friday, May 15, when the series expires.

Although CLF saw a brief burst of put buying earlier this month, the withstanding trend has been toward long calls. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), CLF's 50-day call/put volume ratio of 1.83 ranks in the 97th annual percentile, meaning calls have been bought to open over puts with more rapidity just 3% of the time within the past year. With nearly 48% of the equity's float sold short, though, some of this call buying could be a result of shorts hedging their bearish bets.

Today's price action, however, is sure to be pleasing short sellers. The security plunged to a fresh 11-year low of $4.12 earlier, but was last seen off 5% at $4.32, after Australia lowered its 2015 iron-ore outlook. Year-to-date, shares of Cliffs Natural Resources Inc (NYSE:CLF) are now staring at a 39% deficit.

 

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