Buyers rush into Kinross Gold at lows


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Kinross Gold bounced from its lowest price since late 2008, and the bulls are stepping in.

optionMONSTER's Heat Seeker tracking system detected a surge of activity in the January 12.50 calls, which traded more than 49,000 times against previous open interest of just 8,652 contracts. They initially traded for $0.99 but climbed to $1.36 by the end of the day as the mining stock pushed higher.

KGC ended the session up 5.73 percent to $13.10, but it has lost more than one-quarter of its value in the last three months. Based on yesterday's call buying , investors are looking for a rebound by early in the year.

By using in-the-money contracts, their positions will more closely track movement in the underlying stock. The strategy is more costly than using out-of-the money calls but increases the chance of making some profit from even a small bounce. (See our Education section)

Overall option volume in KGC was 14 times greater than average in the session, with calls outnumbering puts by 7 to 1 in a further reflection of the day's bullish sentiment. Those puts that did trade were mostly sold, which also reflects a belief that the shares are expected to hold their ground or rebound.

(A version of this post appeared on InsideOptions yesterday.)

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

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This article appears in: Investing , Options

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