Peabody Energy Corporation (BTU) Draws a Crowd from Call Buyers

Options volume is soaring on Peabody Energy Corporation (NYSE:BTU), with calls outpacing puts

Mar 9, 2016 at 12:56 PM
facebook X logo linkedin

Peabody Energy Corporation (NYSE:BTU) is buzzing today -- and was halted earlier as a result -- and with 9.6 million shares traded, volume is nearing peak levels. This action is being echoed in the options pits, where overall volume is running at four times the average intraday rate. Calls are the options of choice, however, outpacing puts by a more than 2-to-1 margin.

Drilling down, BTU's January 2018 series is hot, and it looks as if speculative players are purchasing new positions at the 5- and 8-strike calls. If this is the case, the goal is for BTU to settle above $5 and $8, respectively, at January 2018 options expiration. Should the LEAPS expire out of the money, though, the most the call buyers stand to lose is the initial premium paid.

Widening the sentiment scope reveals options traders have preferred long calls over puts in recent months. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for instance, BTU's 50-day call/put volume ratio of 6.53 rests higher than 85% of all comparable readings taken in the past year.

This call-skewed backdrop is echoed in the stock's front-month gamma-weighted Schaeffer's put/call open interest ratio (SOIR) of 0.15. What this indicates is that near-the-money call open interest outweighs put open interest in the monthly March-dated series of options by a more than 5-to-1 ratio.

Looking elsewhere, there may be an ulterior motive from this seemingly bullish bunch. Specifically, 43.5% of BTU's float is sold short, meaning short sellers may be buying to open calls -- particularly at out-of-the-money strikes -- to hedge their bearish bets.

Regardless, those purchasing the stock's near-term options are willing to pay up for elevated volatility expectations. In fact, BTU's Schaeffer's Volatility Index (SVI) of 1,060% sits at an annual high. What's more, the stock's 30-day at-the-money implied volatility of 271.1% is a 52-week peak.

On the charts, Peabody Energy Corporation (NYSE:BTU) has been a long-term laggard. Although the shares are up 30.5% today at $5.92 -- perhaps amid a round of short covering -- they remain 93% lower year-over-year.

Sign up now for Schaeffer's Market Recap to get all the day's big stock movers, must-know technical  levels, and top economic stories straight to your inbox.


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 calls
238.5% GAIN on Oracle calls



Rainmaker Ads CGI