The bears are circling Arch Coal as it continues to struggle.
optionMONSTER's Depth Charge tracking program detected the purchase
of 2,450 February 14 puts for $0.79 yesterday. Equal-sized blocks
were sold in the February 12 puts and the February 15 calls at the
same time for $0.20 and $0.50 respectively. Volume was more than
twice open interest in all three strikes.
The trade cost just $0.09 and will earn a maximum profit of 2,122
percent if shares close at or below $12 on expiration. It also
stands to lose money above $15.
ACI rose 1.45 percent to close at $14.01 yesterday. It has lost
more than half its value in the last year, performing about twice
as badly as the broader coal-mining group.
The stock began falling over the summer as worries about the
sovereign debt caused investors to dump economically sensitive
companies. Shares continued lower in October after management
reported that flooding had caused production to drop sharply.
ACI's next earnings release is scheduled for the morning of Feb.
10, so yesterday's bearish trade could be betting on more bad news.
Yesterday's activity pushed overall option volume in the name to
more than 2.5 times Arch Coal's daily average, according to the
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