Options Trading News

October 29, 2013  Tue 3:16 AM CT

Pretium Resources is near all-time lows, and one trader is looking for a sharp move up or down in the precious-metals producer.

optionMONSTER systems show that a trader was buying March 2.50 puts yesterday, paying $0.60 for large blocks adding up to 15,500. This is clearly a new position, as open interest in the strike was a mere 70 contracts before the trade appeared.

Shortly afterward, a block of 286,000 shares was bought for $3.68. The combination of stock and puts creates a delta-neutral play that would profit from higher volatility than that implied by the options, rather than a specific directional move. (See our Education section)

PVG lost 3.01 percent yesterday to close at $3.54. The Canadian company was above $10 in late August but hit a lifetime low of $3.04 last week.

Overall option volume in the name was 16,513, topping the total open interest and eclipsing the daily average of 648 contracts.
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The covered call and unhedged risk

I have written a few things on the Covered Call Strategy over the last two weeks. Please understand that those two previous articles plus this one do not constitute a proper, fully in-depth lesson on the Covered Call Strategy like we have in our classes at Option Monster Education. I have picked out a few topics that I believe were worth noting and today I am going to add the final one.

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