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July 10, 2013  Wed 3:47 AM CT

CDE: SEE CHART GET CHAIN FIND STRATEGIES
Coeur Mining is at its lowest level in four years, and one trader is apparently betting that shares will plunge again in the next six weeks.

optionMONSTER's Depth Charge system detected the purchase of 2,000 August 6 puts for $0.05 yesterday. This is a new position, as there was no open interest in the strike before the trade appeared.

CDE slipped 0.6 percent to close at $11.68 after dipping to $11.30 earlier in the session, its lowest intraday price since July 2009. The silver and gold miner gapped down from above $30 last November and has declined ever since along with the price of precious metals.

These puts lock in the price where traders can sell the stock no matter how far it might fall. The trader appears to be making a cheap bet that CDE will collapse by mid-August, but the options will expire worthless if the stock remains above the $6 strike price. (See our Education section)

Total option volume in the name was 4,432 contracts yesterday, triple its daily average for the last month. Puts outpaced calls by 1.5 to 1.

The company has not yet scheduled its next earnings report but will present at several industry events in coming months. Those include the Jefferies Industrials Conference on Aug. 15, the Denver Gold Forum on Sept. 22, and the Silver Summit on Oct. 24.
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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.

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