Options Trading News

February 20, 2013  Wed 3:16 AM CT

Goldcorp has been declining for months, but one trader is looking for the stock to reverse course.

optionMONSTER's tracking systems show that a trader bought 3,500 July 37 calls for $1.35 and, at the same time, sold 3,500 July 31 puts for $1.45. Volume was multiples of the previous open interest at each strike, clearly indicating new activity.

The trade is directionally similar to owning the stock, as the long calls would profit from the shares rising while the puts sold short would lose value. However, the opposite would occur if GNC falls. (See our Education section)

GNC fell 0.38 percent yesterday to close at $33.67. The Canadian miner fell on Friday after missing fourth-quarter revenue estimates and is now back to support levels from last July. It has been trending lower with the price of gold since trading above $47 in September.

Total option volume in the name exceeded 18,600 contracts yesterday, more than triple its daily average for the last month. Overall calls outpaced puts by nearly 2 to 1.
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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.

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