OptionsHouse

Options Trading News

November 5, 2012  Mon 11:45 AM CT

GDX: SEE CHART GET CHAIN FIND STRATEGIES
The Market Vectors Gold Miners Fund fell sharply last week with the price of the precious metal, and one trader sees more volatility in the next few days.

The GDX is off 0.32 percent to $49.60 in afternoon trading, continuing the slide that began last week, and is now on pace for its lowest close since Sept. 10. The exchange-traded fund peaked just shy of $53 on Wednesday but gapped below $50 on Friday.

More than 5,000 Weekly 50.50 calls traded today, with a block of 4,043 going for the bid price of $0.57, according to optionMONSTER's tracking systems. This is a clearly new position, as the strike's open interest was just 314 contracts at the start of the day.

The calls appear to have been traded against GDX stock. The two biggest blocks of shares traded one second after the option activity, with prints of 92,150 and 61,484 both going for $49.7368.

So the overall strategy seems to be looking for more volatility in the coming days. The implied volatility of the calls is 38 percent, while the 10-day historical volatility for the GDX shares is 41 percent. (See our Education section)
Share this article with your friends


Related Stories

GDX

Bulls follow momentum in gold miners

February 4, 2016

The Market Vectors Gold Miners Fund has been rebounding in recent months, and a large trade is looking for the uptrend to continue.

OptionsHouse

Premium Services

Upcoming Webinar:

Using Options For Income

http://bit.ly/1nY1OKA

Jon Najarian and Adam Mesh of Options Wealth Machine discuss a detailed strategy utilizing credit spreads to generate income, and how any level of trader can use this simple trading technique.

Education & Strategy

Sweet Spot Exceptions

As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

View more education articles »