Northern Dynasty Up 9% as Rally Hits Third Day; Bullish Options Trade May Be Helping

By Staff,

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Northern Dynasty Minerals ( NAK ) is up nearly 9% to $10.06 a share in U.S. trade this morning, with the Canadian miner possibly gaining on reports that at least one options trader in the US is betting on a big rebound for the recently beat-up stock.

NAK shares have given up more than 60% of their value since early February, falling from a high of $21.08 each to an $8.41 a share close last Thursday, June 16. Northern Dynasty shares (NDM.TO) saw similar declines in Canadian trading.

According to optionMonster, an online news platform, one trader recently purchased 4,000 August 15 NAK calls at $0.20 while selling 4,000 August 20 NAK calls for $0.15. optionMonster suggested two possible explanations:

1) a bullish call spread for two new positions, which would make money if NAK climbs above $15.05 and as much as a 9,900% profit potential if the stock reaches or beats $20 a share; or

2) existing positions in the August 20s were rolled back to the August 15s, doubling its delta -- meaning that it is twice as sensitive to movements in Northern Dynasty's stock price.

Overall option volume was nine times greater than average on Friday, with calls outnumbering puts 38 to 1, according to the news service.

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

Copyright (C) 2014 All rights reserved. Unauthorized reproduction is strictly prohibited.

This article appears in: Investing Commodities
Referenced Stocks: NAK

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