STNG Heads Into Q2 Earnings With Options Traders Turning Cautious

Scorpio Tankers reports Q2 results on July 30 carrying a curious split: the stock has quietly rallied 2.3% on the week to $79.66, the borrow market is wide open, yet options traders are the most defensively positioned they have been in months.

The clearest signal this week is in options. The put/call ratio has jumped to 0.86, more than two standard deviations above its 20-day average of 0.69 — the most elevated defensive reading since at least late spring. That's a material shift. Through late June and early July the PCR held close to 0.69; the spike to 0.90 on Monday before settling at 0.86 Tuesday suggests traders are actively buying downside protection ahead of next Wednesday's print.

Short interest and borrow conditions tell a different story — and the contrast is worth naming. SI has climbed roughly 33% relative to the float over the past month, landing at 5.4% of free float. That's a meaningful move in percentage terms, though the absolute level remains modest at around 2.5 million shares. Crucially, the borrow market is nowhere near stressed: availability is running above 1,280% — meaning there are over twelve shares available to lend for every one already borrowed — and cost to borrow is just 0.42%, near its lowest reading of the quarter. The short-score sits at a middling 43, down slightly from 43.3 a week ago. Positioning looks opportunistic rather than crowded; the fresh shorts are betting on an event-driven dip, not establishing a structural short thesis.

The Street is becoming more selective. Evercore ISI's Jonathan Chappell maintained his Outperform on STNG today but trimmed his target to $94 from $98 — still well above the current price. Morgan Stanley initiated coverage on July 9 at Equal-Weight with an $82 target, essentially stamping a hold just a dollar above where the stock is trading now. The more significant move came from BofA's Ken Hoexter on June 30, who flipped from Buy to Underperform and cut his target from $100 to $78 — below the current price. The consensus mean target is $96, implying roughly 20% upside, but that figure is being dragged down from above. The bear case centres on slowing global GDP, pressure on TCE rates from Asian markets, and rising capex from environmental compliance. Bulls counter with Scorpio's LR2 fleet positioning, which is expected to see 11% fleet growth in 2026, and an operating cash flow that surged more than 45% year-on-year through the first three quarters of FY2025. At roughly 8.8x trailing earnings and just over book value, the valuation is undemanding — but PE has drifted slightly higher over the past month as the stock moved and earnings estimates softened.

Among close peers, the tanker complex got a broad lift this week. TNK and TK both rose around 5% on the day, while INSW added 2.3% and DHT gained 3.2%. STNG's 2.3% weekly move is broadly in line with the group, suggesting the sector is catching a macro tailwind rather than anything specific to Scorpio. That context matters for the Q2 read: if tanker rates are broadly firming, the print on July 30 becomes a test of whether STNG's LR2 mix has outperformed or lagged the crude-tanker peers that dominate the complex.

The July 30 earnings release is the natural next focal point — the last comparable print in May produced only a 0.85% one-day decline, and the five-day reaction was essentially flat. With options now tilted more defensively than at any point since late June, and BofA sitting at Underperform just below the current price, the market's reaction to TCE rate commentary and any fleet guidance will test whether the cautious options positioning was well-placed or early.