Options Trading News

December 28, 2012  Fri 2:14 AM CT

Agnico-Eagle Mines has fallen sharply with the price of gold in the last month, but one trader is counting on a floor beneath the stock.

optionMONSTER's tracking systems detected the sale of 1,500 April 45 puts in 5 minutes yesterday for an average price of $1.65. Open interest in the strike was just 71 contracts at the beginning of the day, indicating that this is a new position.

AEM rose 0.85 percent to $50.85 yesterday as the stock continues to face resistance at its 100-day moving average. The Toronto-based company, which produces gold, silver, and copper around the world, hit a 52-week high of $57.35 on Nov. 26 but has declined with the rest of the sector as precious metals have dropped.

Yesterday's put seller is looking for the stock to close above the $45 strike price at expiration in mid-April 2013. If the shares are below that level at that time, the trader faces the obligation to purchase shares at an effective price of $43.35 when the credit from the put sale is included. (See our Education section)
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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