Cleveland-Cliffs Surges 12% on Q2 Optimism, Tariff Tailwinds, and Cost-Cutting Gains

Summary
• Cleveland-Cliffs (CLF) rockets 12.38% intraday to $10.65
• Q2 adjusted loss narrows to $0.50/share vs. $0.92 in Q1
• Record 4.3M net tons shipped, $4.9B revenue reported
• Trump-era tariffs and footprint optimization drive optimism

Cleveland-Cliffs (CLF) is defying market skepticism with a 12.38% surge to $10.65, fueled by narrowing losses, cost reductions, and Trump administration tariff support. The steelmaker’s Q2 results show a $0.50/share adjusted loss—half Q1’s $0.92—while record shipments and $4.9B revenue signal a turnaround. With tariffs and strategic overhauls reshaping the sector, investors are betting on CLF’s potential to lead the domestic steel resurgence.

Q2 Cost Cuts and Tariff Tailwinds Drive CLF's 12% Rally
Cleveland-Cliffs’ 12.38% surge stems from a Q2 adjusted loss of $0.50/share, a 53% improvement from Q1’s $0.92. CEO Lourenco Goncalves highlighted $15/ton cost reductions and the end of a burdensome slab contract in under five months. Trump administration tariffs, which doubled to 50%, are shielding domestic steel demand, while the company’s $2.7B liquidity cushion and $50/ton Q3/Q4 cost savings projections bolster confidence. The stock’s intraday high of $10.98 reflects optimism around these structural shifts.

Steel Producers Rally on Tariff Hopes, Nucor (NUE) Leads
The Steel Producers sector, led by Nucor (NUE) with a 1.14% gain, is riding Trump-era tariff momentum. Cleveland-Cliffs’ 12.38% jump dwarfs NUE’s 1.14% rise, signaling investors are prioritizing CLF’s aggressive cost-cutting and liquidity position. Sector-wide, tariffs are firming pricing floors, but CLF’s unique focus on automotive steel and footprint optimization gives it an edge. Nucor’s recent price hike and Nippon Steel’s U.S. expansion also highlight the sector’s resilience.

Options Playbook: Leveraged Gamma and Theta Bets on CLF’s Volatility
• 200-day average: 9.86 (below current price)
• RSI: 73.52 (overbought)
• MACD: 0.544 (bullish divergence)
• Bollinger Bands: $6.42–$10.45 (current price near upper band)

CLF’s 12.38% rally is driven by short-term bullish momentum, with technicals suggesting a test of the 52W high ($15.71) remains distant. The RSI at 73.52 hints overbought conditions, but strong gamma and theta in near-term options suggest volatility is priced for further moves. For leveraged exposure, CLF20250725C10.5 and CLF20250801C10.5 stand out.

• CLF20250725C10.5
- Code: CLF20250725C10.5
- Type: Call
- Strike: $10.50
- Expiry: 2025-07-25
- IV: 54.83% (high volatility)
- Leverage: 27.45% (strong gearing)
- Delta: 0.634 (moderate sensitivity)
- Theta: -0.0826 (aggressive time decay)
- Gamma: 0.5476 (high sensitivity to price swings)
- Turnover: $307,024 (liquid)
- Payoff at 5% upside: $0.825/share (12.5% return on strike)
- Why it stands out: High gamma and leverage amplify gains in a volatile short-term rally. Ideal for traders expecting a July 25 expiration surge.

• CLF20250801C10.5
- Code: CLF20250801C10.5
- Type: Call
- Strike: $10.50
- Expiry: 2025-08-01
- IV: 58.92% (moderate volatility)
- Leverage: 18.78% (balanced gearing)
- Delta: 0.598 (moderate sensitivity)
- Theta: -0.0400 (lower time decay)
- Gamma: 0.3383 (reasonable sensitivity)
- Turnover: $71,983 (liquid)
- Payoff at 5% upside: $0.765/share (11.5% return on strike)
- Why it stands out: Lower theta makes it better for holding through earnings uncertainty, with sufficient gamma to capture mid-August momentum.

Hook: Aggressive bulls should load up on CLF20250725C10.5 ahead of the July 25 expiry, while hedgers may pair CLF20250801C10.5 with short-dated puts for a volatility play.

Backtest Cleveland-Cliffs Stock Performance
The backtest of Cleveland Federal Reserve Bank's (CLF) performance following a 12% intraday surge indicates positive short-to-medium-term gains, with win rates and returns improving across various time frames:The data suggests that while the immediate 3 days after the surge had a 48.53% win rate, the 10-day and 30-day periods showed even higher win rates of 52.29% and 57.03%, respectively. Additionally, the returns accumulated over these periods, with a maximum return of 5.51% observed by day 58, indicating that CLF's performance benefited from the intraday surge over a longer horizon.

CLF’s 12% Rally: A Short-Term Bet on Tariff-Driven Optimism
Cleveland-Cliffs’ 12.38% surge is a short-term reaction to Q2 cost cuts and tariff tailwinds, but sustainability depends on Q3/Q4 execution. Watch the $10.98 intraday high for a potential breakout to test the 52W high of $15.71. Sector leader Nucor (NUE) rose 1.14%, signaling broader steel optimism. Traders should prioritize the CLF20250725C10.5 option for a July 25 expiry play, while hedging with the CLF20250801C10.5 for mid-August. Action: Buy CLF20250725C10.5 if $10.98 breaks within the next 48 hours.