Harmony Gold Mining is grinding higher, and one big investor wants to squeeze a few cents from the move.
optionMONSTER's tracking systems detected the purchase of about 7,200 August 15 calls for $0.15 to $0.20 and the sale of an equal number of November 15 calls for $0.65. Volume was below open interest in the August contracts but not November, suggesting that an existing position was closed and rolled forward by three months.
The transaction was probably the work of an investor who owns the South African mining stock. It would have generated about $0.40 of incremental income in return for him or her agreeing to stay long an additional three months.
Such covered-call trades are a common way to earn extra income and manage risk on stocks that are in gradual uptrends. (See our Education section)
HMY rose 2.36 percent to $13.90 yesterday and is up 26 percent in the last six months. It rallied on takeover speculation in March, then pulled back to its 200-day moving average in June and now is trying to continue higher.
Full-year earnings are scheduled for release on Aug. 15.
Overall option volume was 9 times greater than average yesterday, with calls outnumbering puts by 95 to 1.
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