Back Derivatives Strategy

Use Pullback in Century Aluminum (CENX) to Add January Upside Structures to Play Continued Strength in the Aluminum Trade

Published on November 5, 2025

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By

Jeff Jacobson

Ahead of their earnings report later this week, we have seen shares of Century Aluminum (CENX) decline by ~ 17% from their recent highs. This pullback in CENX has happened with aluminum futures not too far off their highs. This move lower in CENX to potential support also comes on the heels of 22V commodity analyst, Colin Fenton, highlighting that aluminum has moved up to the top spot in relative strength on the world physical market among the commodity condition indices (here). Given the pullback in CENX, and the dislocation to the underlying commodity price, I like the setup here (ahead of earnings) to add upside structures via options, that also allow for a sizeable downside cushion.

Trade:
Sell CENX Jan 16th 25 puts
Buy CENX Jan 16th 30/40 call spreads
Costs $0.75 (CENX 28.80 price ref)

Trade Details:

  • Selling the 13% downside puts (after a 17% decline), to buy the 10-point wide upside call spread that starts ~ 4% above current levels
  • Good way to play a bullish aluminum trade over the next few months
  • CENX sitting on potential support, and the 25 level (put strike we are selling) looks like the next “big” level of support short we see a continued move lower
  • CENX 3-month (Jan) implied vol up ~ 50% from the Aug lows (why I prefer to sell the put to own the call spread at this time)
  • Trade can be added to an existing long CENX (aluminum) position, or as an entry-point trade given pullback and bullish view
  • Please contact me or the 22V sales team for updated pricing and execution

CENX 17%+ decline back to support (oct lows and rising 50-day). The next big area of support is $25 (why I favor that put sale to buy the upside call spread)

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AI-generated content may be incorrect.

CENX 3-month implied volatility has been steadily climbing since August and now trading at a premium to 60-day realized vol
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AI-generated content may be incorrect.

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