At least one trader apparently believes that Stillwater Mining
has further upside.
optionMONSTER's Heat Seeker tracking system detected an unusual
three-part trade on the company, which mainly produces platinum and
palladium. The investor bought 2,000 April 19 calls for $3.28 and
sold 3,000 each of the April 24 calls and the April 17 puts for
$1.06 and $0.96, respectively.
The strategy cost about $0.25 per contract owned and will earn a
maximum profit of 1,900 percent if SWC closes at $24 on expiration.
The strategy was different than most because only 2,000 calls were
bought while 3,000 upside contracts were sold. As a result, the
gains will erode if the stock climbs past $24 and turn to losses
The shares fell 0.63 percent to $20.52 yesterday but are up 57
percent in the last six months. The company has benefited from
strong metal prices and is expanding into new areas such as
SWC is now consolidating below the same $22.70 area where it peaked
in early 2008. The next likely resistance is probably around $24, a
support level in 2000 and 2001. That could explain why the investor
selected $24 as the target for their position.
The trade pushed overall options volume in the stock to 9 times
greater than average yesterday.
(Chart courtesy of tradeMONSTER)
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