Silvercorp Metals is attempting to hold support at a key level, and investors are placing cautious trades.
optionMONSTER's tracking systems detected two large trades in the miner, which operates in China and Canada. The first trade appeared to be a calendar spread, with about 6,000 October 7 puts sold for $0.90 and roughly the same number of December 7 puts bought for $1.25.
The strategy reflects a belief that SVM will remain above $7 for the next eight weeks, rendering the contracts sold worthless. As long as the December puts could then be are then worth $0.35 or more, the position could be exited at a profit.
SVM rose 1.38 percent to $8.08 on Friday and is down 38 percent in the last six months. It's now trying to establish a double bottom around the same $8 level where it peaked in late 2009. The company produces gold, silver, zinc and lead.
Later in the session, investors purchased about 10,000 December 6 puts and sold 10,000 December 10 calls. Both priced for $0.90, resulting in no cost. The trade will profit from a drop and force the investor to sell stock above $10, so may have been the work of a shareholder looking to hedge a long position in the equity.
Overall options volume in SVM was 10 times greater than average in the session.
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