Bull looks for bounce in Rare Element
David Russell | [email protected]
optionMONSTER's Heat Seeker tracking program detected the purchase of about 1,500 January 2013 5 calls for $0.45 and $0.50 against open interest of 1,014 contracts. These options have a delta of 0.32, meaning that they will gain about $0.32 for every $1 that REE appreciates. (See our Education section)
The stock is down 0.93 percent to $3.18 today and has lost 80 percent of its value so far this year. It more than quadrupled in the second half of 2010 amid a surge of interest in so-called rare-earth materials but has surrendered all of those gains. The group took another hit yesterday after JP Morgan slashed its price target on rival Molycorp, predicting that increased Chinese exports will hurt pricing.
REE is now back to a level where it traded early last year, which could be leading some chart watchers to expect that it will find support and bounce. If they're right, today's long-term calls will let them profit from a gradual recovery over the course of 2012.
Overall option volume is 4 times greater than average in REE so far today.