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November 15, 2012  Thu 3:47 AM CT

RIO: SEE CHART GET CHAIN FIND STRATEGIES
A large trade is looking for metals producer Rio Tinto to rally in the long term.

optionMONSTER's Heat Seeker tracking system detected the purchase of 5,000 January 2014 55 calls for $4.60. That volume was more than 7 times the strike's open interest of 681 contracts at the start of the session, clearly indicating fresh buying.

These long calls are looking for RIO to gain roughly 25 percent by expiration in mid-January 2014. Those options could be sold at a profit earlier if premiums rise with a stock rally before then, but the calls will expire worthless if the shares don't move. (See our Education section)

RIO fell 2.12 percent yesterday to close at $47.57 and is sitting just below its 100-day moving average. Shares of the U.K.-based company, whose products include copper, aluminum, and iron ore, are down sharply from their 52-week high of $63.18 reached in early February.

Total option volume in the name was 6 times its daily average in the last month. Calls outnumbered puts by 3 to 1.
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It is rare that I get a chance to give a real-life, real-time example in my articles that the readers were not only following but were actually involved in at the time the event is happening. Well, that is where we are right now in our QQQ trade from last week. Let's recap the trade itself.

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