Traders are looking for Cliffs Natural Resources to rally.
optionMONSTER's monitoring program detected the purchase of 5,000 January 5.50 calls for $1.03 and the sale of 5,000 January 7 calls for $0.63 yesterday. Volume dwarfed the open interest in both strikes, showing that these are new positions.
The vertical spread cost a net $0.40 to open and is looking for CLF to rally above $5.50 by expiration in mid-January. The sale of the higher-strike contracts reduces the cost of the long calls but limits potential gains, as the trader will be obligated to sell shares if they rise above $7. (See our Education section)
CLF rose 25.41 percent to $5.41 yesterday and is up 229 percent in the last three months. The iron-ore miner beat earnings and revenue estimates in the morning.
Overall option volume was 6 times greater than average in the name yesterday. Calls outnumbered puts by a bullish 3-to-1 ratio.
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