EQT Corp options flow turns sharply bearish with put/call ratio near 4.87x

On September 11, EQT Corp's options tape revealed a starkly bearish sentiment as put volume significantly outpaced call volume, resulting in a put/call ratio of approximately 4.87x, one of the most lopsided readings observed. The stock was trading at $54.14, down 1.50% from the previous close. While the headline number is difficult to ignore, indicating strong bearish conviction, the underlying data suggests a more nuanced story.

With EQT Corporation's stock trading near the lower third of its 52-week range, down by 15.18% over the past six months, put buyers were piling in at a vulnerable juncture, rather than during a recent peak. Two notable call strikes, set for expiration on September 18 and October 16, were out of the money by 11%, suggesting speculative bets rather than confident bullish positioning.

Interestingly, the 90/110 skew fell by 0.69 points to -1.08, indicating the volatility surface was quietly pricing in the potential for a sharp rally, despite the aggressive bearish flow in options. This could suggest either a mix of hedging by put buyers, who may be long on natural gas infrastructure, or a thin call side that inflated call implied volatility (IV) with modest demand.

EQT, the largest natural gas producer in the US, serves as a direct proxy for natural gas price sentiment. With CFTC's natural gas speculative positions running deeply net short, the options flow is consistent with a broader market narrative: traders are betting against a near-term natural gas price recovery, utilizing EQT puts as their instrument.

Despite the bearish options flow, the volatility surface hints at a potential upside, urging traders to watch for any supply shock or demand catalyst that could validate a bullish thesis before the October expiry.