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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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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