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Upside bets in gold, silver miners


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Slowly but surely, traders are looking for a rebound in precious metals.

optionMONSTER's tracking programs detected several bullish transactions in the sector Friday, led by Newmont Mining, the world's second biggest gold producer by revenue. Traders first sold 4,600 Weekly 17 puts expiring later in the session for $0.31 to $0.09, correctly predicting it would close over the strike. They next purchased almost 3,000 November 19 calls for $0.50, positioning for upside over the next seven weeks.

Silver Wheaton's Weekly 12 calls expiring this Friday, Oct. 9, followed. This time more than 2,200 contracts changed hands for $0.30 to $0.72.

Long calls lock in the price where investors can own a stock, while short puts obligate them buy from others if it drops. Both strategies make money to the upside because they have positive delta . (See our Education section)

NEM rose 7.77 percent to $17.07 and SLW surged 11 percent to $12.77. Both stocks have spent recent months consolidating at multi-year lows and actually outperformed the broader market since the beginning of August. The relative strength comes as the metals consolidate amid signs that the Federal Reserve will delay interest-rate increases. The two stocks also both closed on Friday above their 50-day moving averages for the first time since May.

Goldcorp, the fourth-biggest miner, also saw late put selling in the Weekly 13s expiring the same afternoon. They priced for $0.20 to $0.02. GG ended the session up 7 percent to $12.99.

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

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.



This article appears in: Investing , Options
Referenced Symbols: NEM



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