Peabody Energy is trading at three-year lows, and large call selling is positioning for limited gains.
BTU is down another 1.48 percent to $23.30 in early afternoon trading, on pace for its lowest close since March 2009. The coal miner has been trending lower in the last 52 weeks from above $63 and has given up gains of the previous two years.
More than 7,000 July 27 calls have traded against open interest of 1,747, optionMONSTER's systems show. They were sold all morning, with most changing hands in about 10 minutes, and the big block of 4,000 went for the bid price of $0.94.
This call selling may be tied to a position in the underlying shares, as a block of 124,000 BTU shares was bought for $23.449 about a minute after the options traded. The combination of stock and options creates a delta-neutral position that would be focused more on lower volatility than any specific changes in the share price. (See our Education section)
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