Someone apparently thinks that Thomson Creek Metals is finally
optionMONSTER's trade scanners detected the sale of 41,682 March 5
puts on Friday, most of which priced for $1.45. Volume was more
than 2,000 times the previous open interest in the strike,
indicating that a new trade was initiated.
The investor is now obligated to buy shares in the Canadian metals
company for $5 if they drop below that level by expiration. While
is common, it's unusual to see transactions with
strike prices. (See our
TC fell 0.53 percent to $3.78 on Friday. The stock is up more than
30 percent in the last month but remains well below its peaks
around $14 from early 2011.
will behave similarly to owning the stock, so there are two
potential explanations for the option activity. One is that a short
seller has ridden the stock lower for years and now wishes to hedge
against further upside.
The other possibility is that the trader might like the stock and
is using the short puts as an alternative to buying shares. That
would allow the investor to ride a move up to $5 and still have
some cushion to the downside.
Either way, writing those puts locked in a $3.55 purchase price in
the shares through mid-March.
Total option volume was 43 times greater than average in the name.
TC trades for about half book value, with short interest accounting
for 16 percent of its float.
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