How much lower will Thompson Creek go?
David Russell | firstname.lastname@example.org
The Canadian metals company has been getting punished since early 2011, when it peaked at $16. This morning it's trading at $4.22, down another 9.05 percent.
Our Depth Charge tracking system detected the purchase of about 2,300 September 4 puts against open interest of just 203 contracts. Most of the large blocks priced for $0.40.
Those puts will make money if TC continues to drop throughout the summer. They can also make money from volatility increasing, which often happens when a stock is selling off. (See our Education section)
Shares are down more than 25 percent in the last week alone, with most of that decline coming after the company announced the sale of $200 million in complex high-yielding "tangible equity units." Proceeds will be used to finish building its Mount Milligan copper and gold mine.
Overall option volume in the stock is 5 times greater than average so far today, with puts accounting for more than three-quarters of the activity.