Coeur d'Alene Mines has dropped along with other silver stocks, but at least one investor apparently thinks that the bottom is in.
optionMONSTER's tracking programs detected the sale of about 3,700 October 22 puts, most of which priced for $1. Volume was about 12 times open interest in the strike.
The trade reflects a belief that CDE will hold its ground in the next 3-1/2 weeks until expiration. If it remains above $22, the investor will keep the income and the puts will expire worthless. If it falls below $22, the trader will be required to buy shares, but at an effective entry price of $21 because of the $1 of premium already earned from the put sale.
CDE is down 0.99 percent to $23.02 in morning trading, having lost more than 15 percent of its value in the last week. Gold and silver miners had fared better than most other stocks after the early August selloff but plunged more recently after bears targeted precious metals.
It's noteworthy that the investor chose the $22 level to write puts on CDE because that's where the stock bounced last month. He or she probably expects volatility to decline and is looking to profit from the accelerating pace of time decay in coming weeks. (See our Education section)
Disclosure: I own CDE shares.
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