Trader sees more gains in small miners
David Russell | [email protected]
optionMONSTER's Heat Seeker monitoring system detected the purchase of 11,100 May 18 calls in the Market Vector Junior Gold Miners fund for $0.49. Some 4,000 May 16 calls were sold at the same time for $1.36, but volume was below open interest.
This suggests that an existing long position was closed in the May 16s and rolled to the higher strike. The transaction increases leverage in the event of a sustained rally because the trader now owns more contracts. Making the adjustment cost nothing because the May 18s were cheaper. (See our Education section for more on how options can be used to manage trades.)
The GDXJ is down 0.44 percent to $16.79 in afternoon trading. The fund hit an all-time low below $15 earlier this month but has bounced about 8 percent from those levels.
Sentiment in the industry has been bearish as weak global inflationary and am improving financial environment reduces demand for precious metals. The GDXJ owns small miners and developers that are considered potential takeover targets by larger companies.
Total option volume is triple the daily average so far in the session, according to the Heat Seeker. Calls outnumber puts by more than 8 to 1.