Options Trading News

July 11, 2013  Thu 2:14 AM CT

A large put trade topped the option volume in Newmont Mining yesterday.

optionMONSTER systems show that 9,494 January 25 puts were sold for $2.78 against previous open interest of more than 13,000. The same number of January 23 puts were bought for $1.99 in volume far above open interest of 1,457 at that strike, indicating new activity.

It is possible that this is a credit spread if both sides of the trade are new positions. In that case, the trader will keep a small credit as profit if NEM remains above $25 through expiration in mid-January. But it is more likely that the trader is rolling an existing put position to a lower strike price, reflecting the recent drop in shares and positioning for another leg down. (See our Education section)

NEM fell another 1.7 percent to $26.61 yesterday, its worst close since November 2008. Shares of the gold and copper producer, which were above $70 at the end of 2011, have been cut in half just since last October.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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