SCCO Options Traders Turn Cautious the Day Before the Print

Southern Copper Corporation reports Q3 results tomorrow, and the options market is the most defensive it has been all year.

The put/call ratio closed Tuesday at 1.21, about 1.6 standard deviations above its 20-day average of 1.13. Monday's reading of 1.24 was the highest of the past 52 weeks, against a low of 0.05. That is a sharp tilt toward downside protection concentrated in the two sessions immediately before the release. The pattern is consistent with investors buying puts rather than reducing exposure outright, a positioning choice that reflects caution without outright conviction that the stock falls.

Short interest tells a quieter story. Bears hold roughly 1.3% of the free float, a level that has drifted up about 3.8% over the past month but remains firmly in the low range by any historical measure. Borrow costs are 0.46% annually, down about 7% over the past month. Availability in the lending pool is at 354%, meaning there are more than three shares available for every one currently borrowed, well above the 52-week floor of 163%. None of that points to squeeze dynamics or any meaningful technical pressure on shorts. The elevated short score of 67.2, which has crept up from 65.5 two weeks ago, reflects the combination of rising short interest and the stock running well above analyst targets rather than any tightness in the borrow market.

The Street's position on SCCO has not changed. Every firm covering the stock carries a bearish or neutral rating. Barclays maintained Underweight and raised its target to $168 on Monday, one day before results. UBS holds a Sell with a $180 target. Wells Fargo sits at Equal-Weight with a $190 target. The mean across the group is $178.68, roughly 12% below the current price of $202.34. Targets have been moving higher for months as the stock has run, but none of the direction calls have changed. The P/E is at 26.4x, price-to-book at 11.1x, and EV/EBITDA at 16.3x, all elevated for a mining name. The dividend factor score ranks in the 90th percentile of the ORTEX universe, which at least gives income-focused holders a reason to stay. On EPS momentum over 30 days, the stock scores 74, suggesting estimate revisions have been moving in the right direction even as the rating picture stays negative.

Copper peers have had a rougher week than SCCO. FCX fell 4.9% over the past five sessions. HBM and NGEX dropped roughly 9%. ERO lost more than 11%. SCCO's own 2.4% weekly decline looks relatively contained against that backdrop, which has been a recurring theme through October. The stock is up about 3.4% over the past month while the peer group has struggled. Grupo México holds 88.9% of the company, which effectively removes most of the float and concentrates any institutional activity into a narrow pool. BlackRock added 436,119 shares in the quarter ended September 30. T. Rowe Price added 253,518 shares over the same period. The marginal buyer on the institutional side has been adding, not trimming.

Insider activity has been minor and one-directional. Director Luis Miguel Palomino Bonilla sold small parcels totalling around 1,000 shares between early August and late September, at prices between $195 and $218, for a combined value just above $225,000. The significance scores on each transaction are low, and none were made under a 10b5-1 plan. Net 90-day insider activity is negative but not at a scale that adds weight to the bear thesis.

With results due tomorrow at 3pm New York time, the last print in July saw the stock fall 3.1% on the day and 6.7% over the subsequent five sessions. The data snapshot for this quarter closes on that fact.