Strategy shows confidence in Harmony

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Someone is using an unusual strategy to get long Harmony Gold Mining.

optionMONSTER's tracking programs detected the sale of 8,000 November 13 puts for an average premium of $1.275. An equal number of November 11 puts were bought at the same time for $0.40. Volume was more than 12 times open interest in both strikes.

The trade resulted in a credit of $0.875, which the investor will get to keep if South African gold miner closes above $13 on expiration. The most they can lose is $1.125 if it closes below $11. See our Education Section for more on the strategy, which is a known as a put credit spread.

HMY fell 2.77 percent to $12.27 in late morning trading, and has been grinding sideways of the last year. It's toward the lower end of its recent range, which could make some chart watchers expect it to work its way higher.

The unusual thing about today's spread is that it's in the money. That will give the investor gains up to the $13 level because in-the-money puts move in the opposite direction as the shares.

Overall options volume in HMY is more than 8 times greater than average so far today.

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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