Option Bulls Mine for Gold in Kinross
The bulls targeted Kinross Gold early on Friday and kept buying all session.
Shortly after the open, OptionMonster’s tracking systems detected the purchase of almost 11,000 August 9 calls for $0.20 to $0.23. Volume continued to build and surpassed 24,500 contracts by the end of the session.
Those calls lock in the price investors must pay to buy stock in the beaten-down gold miner, which has been hugging support around $8 since May. If it rallies, the options will generate some nice leverage, but they will expire worthless if it doesn't move.
Kinross shares were trading around $7.98 when the calls hit, but closed the session up 6.86 percent at $8.41. The August 9 calls more than doubled to $0.43 as the shares pushed higher.
Most gold miners have taken a beating in the last year as sovereign debt worries in Europe have pressured precious metals. Untroubled by inflation , investors have instead sought refuge in U.S. Treasurys and German government bonds.
The option activity continued at a furious pace in Kinross for the rest of the day, with volume exceeding 59,000 contracts in comparison with 4,600 in a typical session. Calls outnumbered puts by a bullish 6-to-1 ratio.
—By CNBC Contributor David Russell
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David Russell is a reporter and writer for OptionMonster. Russell has not positions in Kinross Gold.