Options Trading News

December 28, 2012  Fri 5:16 AM CT

Harmony Gold has been bouncing, and the bulls are looking for the miner to keep climbing.

optionMONSTER's Heat Seeker scanners showed the purchase of more than 4,000 May 10 calls for $0.40 yesterday. Volume was more than 17 times previous open interest at the strike, so new money was definitely being put to work.

These long calls lock in the price where investors can buy shares in the South African gold miner. The options can generate significant leverage in the event of a rally because of their cheapness relative to the stock, but they will expire worthless if the shares don't move. (See our Education section)

HMY rose 2.86 percent to $8.64 yesterday and is up 9 percent in the last month. It's been rebounding after forming a double bottom around $7.45 in November and December, its lowest level in about four years.

Total option volume was 12 times greater than average in the session, with calls outnumbering puts by a bullish 38-to-1 ratio.

(A version of this post appeared on InsideOptions Pro yesterday.)
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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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