OptionsHouse

Options Trading News

March 20, 2013  Wed 12:20 PM CT

GDXJ: SEE CHART GET CHAIN FIND STRATEGIES
Small gold miners have bounced, and one investor thinks the gains will continue.

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.

Share this article with your friends


Related Stories

GDXJ

Puts chase decline in junior gold miners

September 29, 2016

A trader is preparing for more downside in the Market Vectors Junior Gold Miners Fund, which has fallen 3 percent in the last month.

OptionsHouse

TRADING WEEKLY OPTIONS

The fastest money in the market
View full report »

Premium Services

Education & Strategy

Using spreads to minimize risk

Last week we discussed the risk vs reward profile of a debit call spread in Wells Fargo (WFC). This week we will run thru the risk vs reward of selling a credit put spread to achieve the same exposure of that debit call spread.

View more education articles »