Can Peabody Energy Pop Even Higher? (BTU)

Shares of Peabody Energy Corporation (BTU) are moving higher today on favorable Q3 earnings. The company reported Q3 EPS of $0.51 on revenues of $2.06 billion. The Street was looking for $0.34 per share on revenues of $1.97 billion. Revenues increased 3.9% year over year.

BTU is now up 12.17%, trading at $29.04. Despite the huge move in the name today, one trader is betting that BTU can move higher over the short-term.

A short while ago, the December $28.00 call was sold 8,428 times, below the bid, for $2.75 just as 12,642 November $31.00 calls were purchased, near the offer, for $0.71. Given the respective open interest on both strikes, 11,542 and 368 contracts, this looks like a trader rolling a long call position from Dec to Nov.

The trader is taking profits on existing in-the-money calls and adding upside exposure via out-of-the-money calls.

30-day implied volatility is falling 11.1% today to 47.23%; 10-day historical vol is registering 62.86%.

Peabody Energy Corporation is a coal company. As of December 31, 2011, the company owned interests in 30 coal mining operations, including an interest in 29 coal operations located in the United States and Australia and a 50% interest in the Middlemount Mine in Australia.

About Michael Zerinskas

Originally from Chicago, Michael J. Zerinskas began his career as an intern for a small high-frequency trading firm based at the CME; he then moved on to become Chief Options Strategist at Benzinga.com. Michael is now Unusual Activity Editor at The Options Insider, specializing in VIX, volatility, and flagging unusual activity.