Precious metals have been weak, and options trades painted a
bleak picture yesterday for several miners in the sector.
optionMONSTER's tracking programs detected heavy call selling in
several companies yesterday, starting with Kinross Gold about
halfway through the morning. Some 4,572 August 4 calls were sold
for $0.17 and an equal number of August 5s calls were bought for
$0.09. Volume was below open interest in the 5s, which suggests an
existing short position was rolled to the lower strike.
Writing calls obligates an investor to sell a stock, making him or
her effectively short. Rolling a short position lower cuts the
level at which they must provide shares to the market and reflects
dimmer expectations for a rally. (See our
Similar activity followed in Sibanye Gold of South Africa. This
time, they bought back the October 12.50 calls for $0.40 and sold
the October 10s for $1.02, netting $0.62 but also lowering their
sell level by $2.50. About 7,000 contracts traded at each strike.
Toronto-based Yamana Gold appeared 20 minutes later, with 10,500 of
the October 11s bought for $0.06 and 10,500 of the October 9 calls
sold for $0.14.
KGC fell 2.36 percent to $3.73 and is back to its lowest level
since early 2002, and AUY dropped 1.79 percent to a five-year
closing low of $7.12. SBGL declined 3.27 percent to $9.76.
Primero Mining, which operates in Mexico and Canada, also saw its
January 7.50 calls sold for $0.50. PPP fell 3.57 percent to
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