Volatility trader targets gold miners
Chris McKhann | [email protected]
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)