Options Trading News

November 15, 2012  Thu 3:47 AM CT

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.
Share this article with your friends


Premium Services

Education & Strategy

The art of trading

As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

View more education articles »