Call seller takes aim at Silver Standard

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Someone is using the volatility in Silver Standard Resources to their advantage.

optionMONSTER's tracking programs detected the sale of more than 13,000 December 20 calls in the precious-metals company, most of which priced for $1.35. The largest trades occurred early in the session when the stock was near its highs for the day.

SSRI fell 7.5 percent to $18.12 yesterday and has lost more than one-third of its value in the last three months. Implied volatility is about 60 percent, which makes options worth more.

Shareholders often sell calls under such a situation to earn premium to reduce their cost basis. (See this story for more on while covered calls make sens e in the current market.)

Also, given that SSRI has fallen so sharply since the summer, some investors may doubt that it can rally significantly above $20 in the near term, which also helps explain yesterday's option activity. About 2,900 January 15 calls were also sold for $3.70, following a similar theme.

Overall option volume was 7 times greater than average in the session.



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

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


This article appears in: Investing , Options

Referenced Stocks: SSRI

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