Options Trading News

August 22, 2013  Thu 4:45 AM CT

Mining company Turquoise Hill Resources is attracting bullish option activity for the second time in less than a week.

Last Friday traders were snapping up calls at the March 6 strike, and now they are turning to nearer-dated contracts. More than 3,300 October calls were bought yesterday afternoon for $0.30, according to optionMONSTER's Heat Seeker real-time tracking system. These are all new positions, as there was no open interest in the strike before the trades appeared.

These long calls lock in the price where traders can buy the stock through mid-October no matter how far it might rise. But these contracts could expire worthless if shares remain below the $6 strike price in the next two months. (See our Education section)

TRQ slipped 1.57 percent yesterday to close at its session low of $5.01 after rising to $5.20 earlier in the day. Turquoise Hill has long been beaten down along with other miners but bounced at $4 at the end of July and has been trying to break above resistance at current levels.

Formerly known as Ivanhoe Mines and now a subsidary of Rio Tinto, the company is based in Canada but operates primarily in the massive Oyu Tolgoi site in Mongolia. Turquoise Hill reported second-quarter earnings on Aug. 12, but the stock barely moved on those results.

Total option volume in the name topped 7,500 contracts yesterday, 2.5 times its daily average for the last month. Overall calls outpaced puts by more than 5 to 1.
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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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