Gammon Lake Resources has gotten slammed along with other gold miners, but one investor wants to stay long.
optionMONSTER's Heat Seeker tracking system detected a surge of call activity in the company, which is based in Canada but operates mines in Mexico. It more than doubled between July and early this month as precious metals rallied and as investors prepare for increased gold production--only to plunge in the last two weeks.
An investor sold 1,500 May 10 calls for $0.08 against existing open interest, indicating a previous position was closed. He or she bought an equal number of June 10 calls for $0.37. The trade, known as a roll, cost $0.29 and will give the investor an additional month of upside exposure to the name.
Adjusting the position now let him or her receive more for their May contracts, which will lose value more quickly that the June calls because they're closer to expiration. (See our Education section)
GRS rose 0.42 percent to $9.47 yesterday. It appears to have bounced at its 100-day moving average, which some chart watchers may consider evidence it's still trending higher.
Overall option volume in the name was 8 times greater than average, with calls outnumbering puts by 14 to 1.
Disclosure: I own GRS shares.
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