Buyers dig for profit in Coeur d'Alene
David Russell | email@example.com
optionMONSTER's Heat Seeker tracking system detected the purchase of about 3,500 January 2014 37 calls, most of which priced for $1.30. Volume was 14 times open interest at the strike.
Long calls lock in the price where investors can buy shares, so they can generate nice leverage in the event of a rally. But they will expire worthless if the stock doesn't move. (See our Education section)
CDE rose 1.26 percent to $24.10 yesterday. This means that those calls are way out of the money, so the stock needs to make a substantial move in the next year for the trade to pay off.
The stock has bounced several times at its 200-day moving average around $22. The average was also a key level in late August, so some chart watchers may want to get long around that price.
In addition, CDE climbed last Thursday even though the price of silver tumbled almost 4 percent. Such price action suggests that buyers are targeting the shares.
Total option volume was 5 times greater than average yesterday, with calls outnumbering puts by a bullish 8-to-1 ratio.
Disclosure: I own CDE shares.
(A version of this post appeared on InsideOptions Pro yesterday.)