Options Trading News

June 7, 2012  Thu 12:20 PM CT

First they were buying calls in Buenaventura, and now they're selling puts.

optionMONSTER's tracking systems detected a surge of activity in the September 36 puts, most which priced at the $1.50 bid price. More than 2,100 changed hands against open interest of just 24 contracts.

Those investors are now obligated to buy BVN shares for $36 if they close below that level on expiration. But above $36, they will keep the $1.50 and the options will expire worthless. Selling puts is a common strategy when investors like a stock but don't want to buy shares.

Last week, there was also buying in the June 42 calls for $0.20. Those same contracts more than doubled yesterday as the stock rallied.

BVN is off 1.49 percent to $40.20 this afternoon, trading in line with the rest of the sector. The Peruvian gold miner has mostly been grinding sideways for the last year while most other precious-metals companies have declined.

Today's put seller also stands to benefits the fact that implied volatility in the name is 37 percent--versus its 27 percent historical volatility. That suggests premiums are higher than they should be, so it makes sense to sell puts. (See our Education section)

Overall option volume in BVN is triple the daily average so far today.
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