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 Depth Charge.
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