Northern Dynasty Minerals (NDM.TO) is up 9% to $9.79 a share in Canadian trade this morning, possibly gaining on reports that at least one options trader in the US is betting on a big rebound for the recently beat-up stock.
NDM.TO shares have given up more than 60% of their value since early February, falling from a high of $20.89 each in TSX trading to an $8.30 a share close last Thursday, June 16. Declines for Northern Dynasty shares ( NAK ) stateside have been similar.
According to optionMonster, an online news platform, one trader recently purchased 4,000 August 15 NAK calls at $0.20 while selling 4,000 August 20 NAK calls for $0.15. optionMonster suggested two possible explanations:
1) a bullish call spread for two new positions, which would make money if NAK climbs above $15.05 and as much as a 9,900% profit potential if the stock reaches or beats $20 a share; or
2) existing positions in the August 20s were rolled back to the August 15s, doubling its delta -- meaning that it is twice as sensitive to movements in Northern Dynasty's stock price.
Overall option volume was nine times greater than average on Friday, with calls outnumbering puts 38 to 1, according to the news service.
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