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Options Trading News

April 26, 2013  Fri 3:16 AM CT

ABX: SEE CHART GET CHAIN FIND STRATEGIES
Barrick Gold is trying to dig itself out of a hole, but one big investor remains bearish.

optionMONSTER's Depth Charge tracking program detected the purchase of 5,343 October 19 puts for $2.25. Equal numbers of contracts were sold in the October 16 puts for $0.96 and October $0.24 calls for $0.76. Volume exceeded open interest at all three strikes, indicating that new positions were initiated.

The trade cost $0.53 and will earn a maximum profit of 466 percent if the stock closes at or below $16 on expiration. They must also sell shares for $24 if they go above that level, so he or she may already own the stock and simply want to hedge against another drop.

ABX rose 0.79 percent to $19.06 yesterday but has lost more than half its value since October amid a collapse in the precious-metals market. The recent selloff brought the stock back to levels last seen at the darkest moments of the 2008 financial crisis.

Yesterday's bearish option trade combines elements of a vertical spread and a collar strategy. (See our Education section)

Some 163,500 contracts changed hands in the name yesterday, more than twice the daily average.
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