Call Traders Blast Middling Mining Stock

CLF options traders are targeting weekly 7/31 contracts

Managing Editor
Jul 10, 2020 at 12:42 PM
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One of the best stocks on the New York Stock Exchange (NYSE) today is mining stock Cleveland-Cliffs Inc (NYSE:CLF), last seen up 9.2% at $5.45. Although the specific catalyst is unclear, what is clear is that options traders are targeting CLF today with extra gusto.

More specifically, over 77,000 calls have changed hands today, 10 times the average intraday amount and 25 times the number of puts traded. Most popular by far is the weekly 7/31 6-strike call, with new positions being opened. Buyers of these calls are banking on a sustained push higher from CLF in the next three weeks, when the contracts expire.

This penchant for calls is nothing new, albeit limited absolute volume. In the last 10 days, 6,336 calls have been bought at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), compared to just 968 puts. 

On the charts, Cleveland-Cliffs stock breached the $3 level back in mid-March, but the subsequent rally was stopped short of the $7 area in June. Since then, the ensuing pullback has been contained by the $5 level, which also coincides with its 100-day moving average. Year-to-date though, it should be reminded that CLF has taken a 35% haircut.

Daily Stock Chart CLF

An exodus of short sellers could help the equity regain some of its momentum. Short interest fell by 13.3% in the two most recent reporting periods, to 98.04 million shares. Still, this accounts for a whopping 36% of CLF's total available float, and over seven days' worth of buying power.


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