Bears sing in tune with Harmony Gold

By David Russell,

Shutterstock photo

Harmony Gold has been trying to advance, but yesterday the bears knocked it down.

optionMONSTER's Depth Charge monitoring program detected the purchase of more than 4,300 September 10 puts, mostly for $0.35, and more than 2,300 November 10 puts for $0.65. Volume was more than 15 times open interest at each strike, so this is fresh buying.

HMY dropped as soon as the puts hit and eventually closed at $10.26, off 0.19 percent on the day. The South African gold miner entered the session with a gain of more than 10 percent in the preceding month, and yesterday's put buyer apparently believes that it's due for a pullback.

The trader now has the right to sell shares for $10 on expiration in September and November--no matter how low they may be at the time. That makes them leveraged to declines in the stock price, without the risks of short-selling.

If HMY doesn't drop, however, the contracts will expire worthless.

Overall option volume in the name was 33 times greater than average in the session. Puts outnumbered calls by 29 to 1.

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
Referenced Stocks: HMY

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