Options Traders Are Loving Cleveland-Cliffs Stock Right Now

Put traders have been growing bolder in recent weeks

Deputy Editor
May 9, 2022 at 1:30 PM
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Mining stock Cleveland-Cliffs Inc (NYSE:CLF) is less than a month removed from a nine-year high of $34.04, which came after an upbeat first-quarter earnings report. The broader market's selloff has taken its toll on CLF recently, with the shares last seen down 4.4% to trade at $23.06. The 260-day moving average, which put pressure on Cleveland-Cliffs stock in January and February, is keeping today's losses in check, while CLF remains up 5.6% year-to-date.

CLF Chart w 260-Day MA

The recent volatility hasn't scared away bullish options traders. Cleveland-Cliffs stock just landed on Schaeffer's Senior Quantitative Analyst Rocky White's list of S&P 400 (SP400) stocks that have attracted the highest weekly options volume within the past two weeks. In the past 10 days, 603,827 calls were exchanged, which is more than double the 280,590 puts that crossed the tape. The total options volume seen in the last two weeks puts CLF at the very top of White's list. The most popular during this time period was the May 30 call, followed by the June 30 call. 

MAO Chart May 9

While calls outpaced puts on an absolute basis in the last two weeks, there's a preference for puts that implies an unwinding of pessimism could provide tailwinds for the equity. This is per CLF's 50-day put/call volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) that stands in the 97tht percentile of its annual range.

Echoing this, Cleveland-Cliffs stock sports a Schaeffer's put/call open interest ratio (SOIR) that also sits higher than 97% of readings from the past year. In other words, short term traders are much more put-biased than usual, as well. 

Options are an attractive route at the moment, per the equity's Schaeffer's Volatility Index (SVI) of 69% that sits in the relatively low 24th percentile of its annual range. This indicates options traders are pricing in extremely low volatility expectations for the time being. What's more, CLF ranks high on the Schaeffer's Volatility Scorecard (SVS), with a score of 73 out of 100, meaning the security has consistently realized bigger returns than its options implied volatility (IV) levels have priced in.


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