Peabody Energy Corporation (BTU) Bear Bets On Even More Downside

Peabody Energy Corporation (NYSE:BTU) has had a horrendous year, and it looks like at least one trader isn't expecting things to get better

Jul 2, 2015 at 10:55 AM
facebook X logo linkedin


It's been a downright ugly year for coal concern Peabody Energy Corporation (NYSE:BTU). All-in-all, the shares are down over 89% in the past year, and widening the technical scope shows that the stock has been in a consistent downtrend since April 2011. Judging by recent option activity, it seems as though some are anticipating even further moves to the downside.

Overall, BTU put volume ran at five times expected volumes yesterday. Looking at data from Trade-Alert, it looks like one trader rolled down her bearish bet. Specifically, it appears she sold to close 20,440 January 2016 2-strike puts for 75 cents apiece, and then bought to open 32,704 January 2016 1.50-strike puts for 44 cents apiece. Simply stated, this trader is expecting BTU to slide below $1.50 by January 2016 options expiration.

Looking back, it's actually been call buying that's been popular among the equity's option traders. During the past 10 weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), BTU has posted a call/put volume ratio of 3.59 -- higher than four-fifths of readings from the past year.

But pump the brakes. There's a good chance some of this activity is the work of short sellers hedging their bearish bets against any upside. In fact, close to one-third of the stock's float is controlled by short sellers, accounting for nearly a week's worth of trading, at normal daily volumes.

Even with Peabody Energy Corporation's (NYSE:BTU) miserable performance on the charts, six brokerage firms have maintained "buy" or better opinions. Even more startlingly, the shares' average 12-month price target stands at $6.85 --  almost four times BTU's current price of $1.77. It wouldn't be the least bit surprising to see a round of bearish notes hurt the stock in the near future. And wouldn't you know it, Deutsche Bank just this morning lowered BTU's rating to "sell" from "hold,"  and its price target to $1.30 from $6 -- as the firm also did to a number of commodities stocks.

 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI