Ramaco Resources A (METC) Plunges 10%: What’s Behind the Sudden Sell-Off?

Summary
• Ramaco Resources A (METC) tumbles 9.97% to $23.94, its lowest since November 2022
• $300M convertible notes offering and delta offering trigger massive hedging activity
• Intraday range of $22.37–$24.42 highlights extreme volatility
• Sector peers like Peabody Energy (BTU) dip 0.68%, underscoring coal market fragility

Ramaco Resources A (METC) is in freefall after announcing a $300 million convertible notes offering and a concurrent delta offering of borrowed shares. The stock’s 10% intraday collapse has ignited a frenzy in options markets, with high-IV contracts and leveraged positions amplifying the sell-off. As the coal sector grapples with macroeconomic headwinds and rare-earth project uncertainties, traders are scrambling to position for a potential floor or further deterioration.

Convertible Notes Offering Sparks Hedging Frenzy
Ramaco’s $300 million convertible notes offering, priced at a 35% premium to the delta offering’s $24.25 share price, triggered a cascade of hedging activity. The underwriters borrowed 2.245 million shares to facilitate conversions, creating immediate downward pressure. The capped call transactions, designed to limit dilution, now face a 125% cap price of $54.56—far above the current $23.94 level—leaving the stock exposed to dilution if prices rebound. This structural imbalance, combined with the overhang of $300 million in new debt, has spooked investors.

Coal Sector Mixed as Peabody Energy (BTU) Trails METC's Sharp Drop
Peabody Energy (BTU), the coal sector’s bellwether, fell 0.68% to $24.14, lagging METC’s 10% plunge. While both stocks face macroeconomic headwinds—including U.S. emergency powers to curb coal plant closures—METC’s dual focus on coal and rare earths amplifies its volatility. The sector’s broader struggles are evident in weak demand for metallurgical coal and regulatory uncertainty, but METC’s unique capital raise structure has isolated its decline.

Bearish Options and ETFs to Capitalize on METC’s Freefall
• 200-day MA: $17.62 (below) • RSI: 17.39 (oversold) • MACD: -2.22 (bearish) • Bollinger Bands: $21.37–$57.71 (oversold)

The technicals scream short-term bearishness, with RSI at 17.39 and MACD -2.22. The 200-day MA at $17.62 suggests further downside, while the Bollinger Bands’ lower bound at $21.37 could act as a critical support. For aggressive short-term bets, the options chain offers two standout contracts:

• METC20251121P22 (Put, $22 strike, Nov 21): IV 104.59%, leverage 19.08%, delta -0.316, theta -0.0397, gamma 0.066, turnover $31,585. High IV and gamma suggest strong sensitivity to price drops. If METC falls 5% to $22.75, payoff is $0.75 per contract.
• METC20251121P23 (Put, $23 strike, Nov 21): IV 116.32%, leverage 12.42%, delta -0.391, theta -0.0461, gamma 0.064, turnover $51,570. Higher delta and liquidity make this ideal for a moderate decline. A 5% drop to $22.75 yields $0.25 per contract.

Both options leverage high IV and gamma to amplify returns in a bearish scenario. For ETFs, the lack of direct leveraged products means focusing on sector ETFs like XLB (Materials Select Sector SPDR) or MLPA (Materials Select Sector SPDR ETF) for indirect exposure. Aggressive traders should target the $22.37 intraday low as a near-term floor, with a 5% move to $22.75 offering a 10–15% return on puts.

Backtest Ramaco Resources A Stock Performance
Below is a concise event-study summary together with an interactive visual report.Key take-aways • Sample size: 26 trading days where METC fell ≥ 10 % intraday (2022-01-01 → 2025-11-05). • 30-day cumulative performance: +8.96 % vs. +7.06 % for the stock’s unconditional return over the same windows – an incremental edge of +1.9 ppts that is not statistically significant at conventional levels. • Win-rate hovers ~50 %; no clear monotonic drift emerges after the plunge. • Short-term (1–3 day) mean re-version is weak; most of the excess performance accrues after the second trading week. • Practical implication: a mechanical “buy the -10 % intraday dip, hold up to a month” rule has not delivered a dependable edge; further filters (volume surge, macro backdrop, etc.) would be required before live deployment.Assumptions we auto-filled 1. Price series: unadjusted daily close (typical for event studies). 2. Analysis window: 30 trading days post-event (default of the engine). 3. Benchmark: METC’s own unconditional return (as per engine’s default). Explore the full event-study charts and distribution details in the interactive panel:Feel free to drill down into individual events or let me know if you’d like to test additional filters.

Ramaco’s Floor in Sight: Act Before Hedging Pressure Eases
Ramaco Resources A’s 10% collapse is a structural event driven by its convertible notes offering and hedging mechanics. The $22.37 intraday low and $21.37 Bollinger Band support suggest a potential bottom, but the $300 million debt overhang and rare-earth project uncertainties mean volatility will persist. Peabody Energy’s 0.68% decline highlights the sector’s fragility, but METC’s unique capital structure isolates its risks. Traders should prioritize the METC20251121P22 and METC20251121P23 puts for a 5–7% move to $22.75, while monitoring the $22.37 level for a potential rebound. If the $21.37 support breaks, the 52-week low of $6.30 becomes a grim but plausible target.