The steel stock that has the shorts and options traders on edge — SkimNews
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- Cleveland-Cliffs reports earnings Oct. 19 with short interest near 14%, after a nearly 16% one-day price jump following its July release — nearly double the stock's long-term historical average move of slightly over 8%.
- CLF's CEO has publicly taunted short sellers, saying he likes to "boil" them "like frogs" — fueling options traders bracing for big post-earnings moves.
- The article proposes a strangle-swap (double-diagonal): sell November 11 puts at $0.43 and November 17 calls at $0.25, buy January 10 puts at $0.49 and January 18 calls at $0.43, for a net debit of $0.24 ($24 per spread).
- The trade is most profitable if CLF lands between $11 and $17 after the report, letting the short November strangle collapse in value while leaving the trader holding a long January strangle as "free" optionality.
- Maximum risk is $1.24 per spread ($124 per contract) on either side — the $1.00 strike-width differential plus the $0.24 net debit.
Why it matters: A 14% short interest combined with a combative CEO creates a combustible setup heading into earnings, and the article argues premium sellers can capture that inflated front-month fear with a defined-risk double-diagonal that costs just $24 per spread to enter.
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