Bull sticking with AngloGold Ashanti
Mike Yamamoto | [email protected]
optionMONSTER's Heat Seeker program shows that a trader sold 1,060 February 30 calls for $0.30 and bought the same number of April 30 calls for $1.30 yesterday. Volume was below open interest in the February contracts but above it in the April options.
This indicates that the investor is closing the nearer-dated position and rolling it forward. He or she is paying a net $1 to avoid the accelerating time decay of the February contracts, which expire at the end of next week, while providing another two months for the strategy to work.
AU slipped 0.48 percent yesterday to close at $29.16 after falling to $27.02 in the previous session, its lowest intraday price since February 2009. The Johannesburg-based mining-company has been trending lower ever since its hitting 52-week low a year ago but bounced sharply on heavy volume Friday as it made a run toward its 50-day moving average.
The new long calls, which lock in the price where the stock can be purchased, are looking for AU to gain at least 6 percent by mid-April. These options could be sold earlier at a profit if they gain in value with any rally before then, but they will expire worthless if shares are below the $30 strike price at that time. (See our Education section)
Total option volume in AU reached 5,595 yesterday, more than double its daily average of 2,268. Calls outnumbered puts by 5.5 to 1.
AngloGold attracted bullish call buying on two other occasions in the last month. The company is scheduled to release fourth-quarter results on Feb. 20.