Trades eke income from Harmony Gold


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Harmony Gold Mining is grinding sideways, and one investor is using it as a source of income.

optionMONSTER's tracking programs detected the sale of 8,000 January 14 puts for $1.04 and the purchase of an equal number of January 12.50 puts for $0.57. Volume is more than triple open interest in all three strikes.

The investor collected $0.47, which he or she will get to keep if HMY closes above $14 on expiration. This credit spread earns income from the passage of time rather than a directional move. It also uses the lower-strike contracts as a hedge in case of a big drop. (See our Education section)

At the same time, 8,000 November 13 puts were bought for $0.08 and 8,000 November 11s were sold for $0.01, but volume was below open interest at those strikes. This suggests that the investor had previously sold a credit spread in November and is now rolling that position forward by two months.

Such transactions often occur near expiration. The activity pushed overall option volume in HMY to 18 times greater than average so far today.

The stock is down 0.42 percent to $14.09. It has spent most of the last six months fluctuating between $12 and $15.

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

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This article appears in: Investing , Options

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