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
earns income from the
passage of time
rather than a directional move. It also uses the lower-strike
contracts as a
in case of a big drop. (See our
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
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 The NASDAQ OMX Group, Inc.
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