Options Bears Seek out Mining Stock Amid Breather

Puts are running at three times what's typically seen at this point

Deputy Editor
Dec 28, 2020 at 2:18 PM
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Cleveland-Cliffs Inc (NYSE:CLF) is taking breather after its recent rally, which culminated in a Dec. 23 five-year high of $14.65. The 10-day moving average, a trendline that acted as close support throughout the recent surge, is appearing to keep a cap on today's losses. At last check, CLF is down 1.7% at $13.91. But regardless of the chart support in place, options traders are approaching the mining stock with a bearish slant.

CLF Dec 28

More specifically, over 18,000 puts have crossed the tape so far -- three times what's typically seen at this point -- in comparison to 10,000 calls. The July 7 put is the most popular by far, with new positions being opened there.

These premiums are well-priced at the moment too, per the stock's Schaeffer's Volatility Index (SVI) of 60%, which stands higher than 16% of all other readings in its annual range. This implies that options players are pricing in relatively low volatility expectations on CLF at the moment.

Meanwhile, though short interest has started to fall off, down 12.6% during the last two reporting periods, the 56.06 million shares sold short still account for 20.8% of the stock's available float. In other words, it would take nearly five days to buy back these bearish bets at CLF's average pace of trading, revealing plenty of pent-up buying power.


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