Arch Coal (ACI) is up 30 cents to $6.53 in active trading of 4.9 million shares after a five-day 18 percent run higher. Options action is heating up in the coal producer, with about 13,000 puts and 3,900 calls traded on the stock so far. Oct 6 puts, which are 8.1 percent out-of-the-money and expiring in 37 days, are the most actives. The flow includes a sweep of 3382 contracts for 31 cents each this morning across multiple exchanges and is an opening buyer, according to ISEE data. 8,760 now traded against 6,425 in open interest. Sep 6 calls are the 2nd most actives in ACI today, with 2,800 traded and 70 percent hitting on the bid. Oct 5, Sep 6 and Oct 7 puts are seeing interest and 30-day ATM vols in options on Arch Coal moved up 14 percent to 80. The sector has been rebounding in recent days, but the longer-term trend is bearish. Market Vectors Coal Fund (KOL) was at 52-week lows a week ago and down 33.4 percent YTD. Today’s order flow in ACI seems to suggest that some investors are bracing for another leg lower in the stock in the weeks ahead.
About the Author (Author Profile)
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.