Peabody Energy (BTU, news, chart) puts are active ahead of an earnings report due out tomorrow morning before the opening bell. 36,000 contracts have traded, compared to 11,000 calls. The stock is down $4.18 to $65.05 amid weakness in the coal sector. The Market Vectors Coal ETF (KOL) is trading down $2.47 to $47.38. A of today’s put activity in BTU can be traced back to blocks of September puts that traded on the AMEX at around 12.45 Eastern. At that time, 10,000 of the BTU September 65 puts traded bidside or for $7.00 a contract. At the same time, 20,000 September 55 puts traded offerside or for $2.90 a contract. The volume is perhaps a rolling down of protective puts from 65 to 55 ahead of the earnings. Or, it is possibly part of a 1 x 2 ratio backspread.
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Frederic Ruffy is a well-known trader, writer, and strategist who has spent years educating investors and creating intelligent, insightful, unbiased market observations that are frequently cited by the Wall Street Journal and other financial publications. As senior analyst, Fred provides frequent and regular notes and daily updates for activity of interest.