Gold miners have been one of the weakest groups in the last two months, but yesterday the activity returned.
optionMONSTER's Heat Seeker tracking system detected a surge of unusual call activity in Barrick Gold, AngloGold Ashanti, Gold Fields, and Agnico-Eagle Mines. Most of the transactions occurred around the same time in the first three hours, which suggests it was the work of one or two large investors.
In ABX, more than 9,000 October 50 calls were bought, most of which priced for $0.85. In AU, there was heavy buying in the October 50 and October 55 calls. Volume was below open interest in all three strikes, so new positions could have been opened, or existing short trades may have been closed.
The transactions in AEM and GFI were uncannily similar: Some 4,300 AEM August 80 calls were purchased for $0.24 at the same time an equal number of November 72.50s were sold for $2.65. More than 10,000 GFI July 17 calls were bought for $0.01 about an hour later, while 10,000 October 16 calls were sold for $0.31.
In both trades, volume was below open interest in the shorter-dated contracts, indicating that existing short positions were rolled out in time and to lower strike prices. That probably means shareholders have less hope of upside and are looking to recover cash by writing calls.
The activity in Harmony Gold was more clearly bullish, with investors using calls and puts to simulate ownership in the stock following a big pullback.
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