OptionsHouse

Options Trading News

December 28, 2012  Fri 2:14 AM CT

AEM: SEE CHART GET CHAIN FIND STRATEGIES
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)
Share this article with your friends


OptionsHouse

Premium Services

Upcoming Webinar:

Using Options For Income

http://bit.ly/1nY1OKA

Jon Najarian and Adam Mesh of Options Wealth Machine discuss a detailed strategy utilizing credit spreads to generate income, and how any level of trader can use this simple trading technique.

Education & Strategy

Sweet Spot Exceptions

As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

View more education articles »