Bearish Option Bettors Target Alpha Natural Resources, Inc. (ANR)

09/11/2009 12:01 am EST

Focus: OPTIONS

Elizabeth Harrow

Financial Analyst, Schaeffer's Investment Research, Inc.

Buy-to-open put volume is approaching peak levels on Alpha Natural Resources, Inc. (ANR). On Tuesday alone, traders on the International Securities Exchange (ISE) bought to open 2,580 of these bearishly oriented options, compared to just 296 calls. Meanwhile, the stock's ten-day ISE put/call volume ratio of 1.38 is hovering just seven percentage points from a 52-week peak.

ANR price chartIn keeping with this rampant pessimism, ANR's Schaeffer's put/call open interest ratio (SOIR) arrived today at 0.63, in the 91st annual percentile. This lofty rank suggests that short-term option players have been more pessimistically aligned toward ANR just 9% of the time during the past year.

Conversely, short sellers have been heading for the hills. The number of ANR shares sold short plummeted by more than 63% during the most recent reporting period, providing a fresh influx of buying pressure for the security. With 8.2% of the stock's float still dedicated to short interest, this is still a viable source of sideline cash for the shares.

Meanwhile, on the charts, ANR continues to enjoy the support of its ten- and 20-week moving averages. These trend lines have acted as a double-barreled backstop since late April, and ANR caught a lift here amid last week's dip in the broader equities market.

By Elizabeth Harrow of Schaeffer’s Trading Floor Blog

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