Call Players Blitz Soaring Cliffs Natural Resources Inc (CLF)

Cliffs Natural Resources Inc (NYSE:CLF) is up 26%, after the mining firm unexpectedly swung to a first-quarter profit

by Karee Venema

    Published on Apr 28, 2016 at 11:52 AM
    Updated on Apr 28, 2016 at 11:54 AM

    Cliffs Natural Resources Inc (NYSE:CLF) is breaking out today -- up 26% at $5.43 -- after the mining firm unexpectedly swung to a first-quarter profit. Additionally, CLF said it has settled its contract dispute with Essar Steel Algoma. Against this backdrop, CLF stock and option volume is soaring, with both currently docked in the 100th annual percentile.

    By the numbers, roughly 25.2 million shares of CLF have traded thus far. Meanwhile, in the options pits, 41,539 calls have crossed the tape -- eight times the average intraday pace -- compared to around 6,552 puts.

    Most active are CLF's January 2017 5.50- and 7-strike calls, where it looks like one speculator may be initiating a short call spread. Elsewhere, shorter-term traders appear to be purchasing new positions at CLF's weekly 4/29 5- and 5.50-strike calls. If this is the case, the call buyers expect the security to extend today's rally through tomorrow's close, when the weekly series expires.

    More broadly speaking, call buyers have been active in CLF's options pits in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day call/put volume ratio of 4.36 ranks in the 75th annual percentile.

    Echoing this call-skewed backdrop is CLF's Schaeffer's put/call open interest ratio (SOIR) of 0.62. Not only does this show that calls outweigh puts among options expiring in three months or less, but it sits lower than 87% of all comparable readings taken in the past year. In other words, short-term speculators are more call-heavy than usual.

    On the charts, Cliffs Natural Resources Inc (NYSE:CLF) has been fighting back since bottoming at a 28-year low of $1.20 in mid-January -- up more than 352%. What's more, CLF stock has torn through multiple levels of resistance during this uptrend, and is currently on track for its first close north of $5 since last June.

    CLF daily chart April 28

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