Gas, Oil, and Coal Receive Price Target Boosts; Arch Resources (ARCH) and Diamondback Energy Inc. (FANG) Options Flow Reflect Price Target Reaction

October 4, 2021

10:25 ET: The Gas, Oil, and Energy sectors received price target increases from numerous analysts early this morning. Among those with a bump in price target, two companies stand out from the crowd.

Coal miner Arch Resources (ARCH) received the most impressive price target increase this morning, following record breaking news by coal futures.  Previously holding an $87 price target from B. Riley, ARCH has been bumped up by a whopping $33 for a new price target of $120.

Options flow last Friday, October 1st, was mixed for ARCH, with a slight bullish lean. Premiums spent on options for ARCH weren’t very elevated, with most orders coming in at less than $10k in premium. Fast forwarding to today, Monday, October 4th, the flow shows a more bullish stance than before the weekend break.

In the image above, we can see that the premiums spent on ARCH option orders aren’t massive, though they are elevated when compared to Friday’s flow. The $100 strike is most popular this morning, with traders targeting the November 19, 2021. Some longer-dated orders also came in, though much smaller in size, on the $100 and $140 call strikes expiring in February, 2022.

Diamondback Energy (NASDAQ:FANG) was also recipient of a handsome price target increase. Coming from Goldman Sachs, FANG was bumped up to $116 from a previous target of $103; a $13 increase. On Friday, FANG showed mixed sentiment, however the bullish flow outweighed bearish flow.

Trader focus on Friday revolved around sold $100 puts (a bullish indicator) and sold $75 calls (a bearish indicator), namely for October 15, 2021 expiration.

Today’s flow for FANG, despite the stock price rising significantly during morning trading, has a heavy bearish lean, with millions in premium spent selling call contracts dated mainly in 2022. Orders are full of multi-leg strategy trades, as well, indicated by the ⇅ symbol to the left of the ticker.

Both bullish and bearish orders for FANG are concentrated on LEAP orders; options with an expiration date no less than a year away from the date of purchase. Multi-leg orders dated for January 20, 2023 are the most popular among the Diamondback flow today.

At time of publication, ARCH was trading at $100.94 (+3.49%), having reached a morning high of $104.03.

FANG was trading at $100.96 (+2.12%), having reached a daily high of $101.30.