Options Action: Mining Exchange Traded Fund
Options action is positive for the metals and mining sector today as investors place bullish trades on the XMEmining exchange traded fund.
New money is streaming into the December 50 calls on the SPDR S&P Metals & Mining ETF, driving up premiums from $1.30 to as high as $1.65. The calls changed hands 16,542 times against open interest of only 100 contracts, with purchases dominating the activity, according to OptionMonster's tracking systems.
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The XME is flat on the day at $39.74 but is up 5 percent in the last month, compared with a 6.4 percent gain for the S&P 500 Index. Its largest holdings include AK Steel Holding , coal producer Massey Energy and Steel Dynamics . Massey Energy is scheduled to report earnings after the bell tomorrow.
XME needs to rally another 30 percent by December for the calls purchased today to turn a profit. In another bullish trade, investors sold the December 39 puts to earn $4.60 to $4.80 in premium. Volume in the strike totaled 6,324, versus open interest of 1,641 contracts.
Options volume in the name was about four times average, with calls outnumbering puts by more than 2 to 1.
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David Russell is a reporter and writer for OptionMonster.