Olin Corporation enters the final stretch before its July 30 earnings report with the Street finally catching up to what short sellers have been pricing in for weeks.
The most important development since the last note is a dramatic analyst reversal at BofA Securities. On June 30, the firm cut its rating from Buy to Underperform and slashed its price target from $32 to $21 — a double downgrade that sent an unmistakable signal. Mizuho followed the same morning, trimming its target to $23 from $26 while keeping its Neutral rating. JP Morgan had already lowered to $25 from $26 on June 18. The direction of travel is now unambiguous: the Street has shifted from a cautious-but-constructive view to outright bearish, with the consensus mean target falling to $28.50 — still well above the $19.82 close, but the gap is closing fast. Morgan Stanley, which held an Underweight going into these moves, looks prescient by comparison. The bear case is straightforward: chlor-alkali is under pressure, the Brazil facility closure leaves stranded costs, and vinyls competition is intense. The bull case hinges on Epoxy and CAPV pricing actions bearing fruit — but that thesis is now on probation.
Short interest had already been telling this story. Bears rebuilt positions aggressively through June, with SI rising 31% over the past month to 13.3% of free float — its highest level in this cycle. The weekly change is a further 5.7% increase. That's a meaningful position, and the ORTEX short score of 57 has held in a tight band near its recent peak all week, confirming the bearish positioning is entrenched rather than fading. Borrow conditions are not the constraint: availability is extremely loose at over 1,000%, meaning there are roughly ten shares available to borrow for every one currently shorted. Cost to borrow is just 0.50%, ticking up 5% on the week and 38% over the month — still historically cheap. The lending market offers no friction to new shorts.
Options are the one signal that still diverges. The put/call ratio of 0.42 remains well below its 20-day average of 0.57, running more than one standard deviation light on puts — a posture that was flagged as a notable call-side tilt in last week's note and has persisted. The stock fell 4.8% on Tuesday and 7.6% on the week to close at $19.82, down 23% over the past month. That kind of price action into a high-call-skew setup is unusual: either options traders are speculating on a bounce, or the hedges were simply placed too early and have now been unwound at a loss. The valuation multiples track the damage — the P/E has compressed by more than 12 turns over 30 days to 34.7x, P/B is down to 1.45x, and EV/EBITDA has drifted to 7.4x. The factor score picture sharpens the contrast: analyst recommendation divergence ranks in the 95th percentile of the universe — a reflection of the sheer disagreement between those still holding constructive ratings and the newly bearish bloc — while the short score rank falls in the bottom 5th percentile.
The stock is weakening in company. Closest peers DOW and MX fell 9.8% and 10.0% on the week respectively, suggesting broad commodity chemicals pressure rather than an OLN-specific collapse. CE dropped 4.4% and WLK 4.6%. TROX fell 5.7%. The one outlier was ASIX, which gained 2.7% — an isolated move in a sector otherwise trending lower. OLN's 7.6% weekly decline outpaced most of this group, and the BofA downgrade arriving into already-weak sector tape amplified the move.
What to watch heading into July 30 is whether the options market's call-skew posture closes toward the elevated short interest, or whether the shorts begin to trim ahead of a print that may finally confirm the Epoxy recovery thesis — or bury it.
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