Aluminum Corporation of China has been plunging since early
2010, and one bear is wagering on further downside.
optionMONSTER's Depth Charge tracking system detected the purchase
of 750 January 19 puts for $2.84 and the sale of an equal number of
January 20 calls for about the same price. The transaction resulted
in a net cost of approximately zero and drove options volume in the
metal company to more than triple the daily average.
ACH up 0.05 percent to $19.66 in afternoon trading but is down 39
percent since hitting a 19-month high of $34.27 on Jan. 11. It then
rolled over after hitting resistance at its 200-day moving average
in April (see chart) and has been dropping like a rock since.
The shares didn't get any relief after the company, also known as
Chalco, reported a profit on April 20 and said demand was
improving. Yesterday ACH said it may freeze a $2.5 billion bauxite
plant in Australia in response to a proposed tax on resource
The stock has also been hit by weakness in the metals and materials
sector since early April as investors worry the global economic
recovery may be slowing.
Today's option trade, known as a bearish combination, simulates a
short position in the stock. It will make money if ACH falls below
$19 and lose money if it climbs above $20.
(Chart courtesy of tradeMONSTER)
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