Bears dig into miner China Shen Zhou


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China Shen Zhou Mining & Resources had a massive rally in late 2010, but the momentum this year has been lower.

This morning traders are looking for that drop to continue, snapping up more than 1,800 March 5 puts for $0.55 to $0.65. Volume was almost triple open interest in the strike.

SHZ fell 4.57 percent to $5.03 in morning trading and has lost 40 percent of its value since the beginning of January. Shares of the Beijing-based miner had surged more than 1,000 percent between October and early 2011 as investors piled into producers of rare-earth minerals, which are used in mobile phones and other popular products.

Other companies in the sector such as Rare Element Resources and Molycorp have fared better and held most of their gains. Last year's rally occurred after China cut exports of the minerals, a group of 17 elements including scandium and yttrium that are used heavily in electronics.

Overall option volume in SHZ is 9 times greater than average so far today, with puts outnumbering calls by 5 to 1, according to the Depth Charge.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.

This article appears in: Investing , Options

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