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January 23, 2013  Wed 9:26 AM CT

KGC: SEE CHART GET CHAIN FIND STRATEGIES
Kinross Gold has been in a tight range for months, and option traders are looking for more of the same.

optionMONSTER systems show that just over 10,000 August 8 puts have traded against previous open interest of 1,103 contracts. The biggest block of 6,848 was sold for the bid price of $0.30.

The put selling is a bet that KGC will be above $8 through that August expiration. If the stock is below that strike price, traders will face the obligation to buy shares. (See our Education section)

KGC is down 2.13 percent to $9.66 this morning. The Toronto-based miner has been trading between $11 and $9 since the start of September.
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Education & Strategy

Sweet Spot Exceptions

As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

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