Post by Catdaddy on Aug 27, 2007 19:43:49 GMT -5
Newmont Mining calls draw interest as shares fall
Mon Aug 27, 2007 6:32PM EDT
By Doris Frankel
CHICAGO, Aug 27 (Reuters) - Investors flocked to Newmont Mining Corp (NEM.N: Quote, Profile, Research) calls hoping to catch a share rally within the next few months as the stock of the world's No. 2 gold producer fell on Monday.
Newmont was not immediately available to comment on the unusual option activity.
The shares of Denver-based Newmont dropped 1.72 percent, or 71 cents, to close at $40.45. Its stock was at $52.64 last September, but slipped to hit a 52-week low of $38.01 on Aug. 16.
The catalyst for the heightened bullish option activity was not clear, analysts and traders said.
"Various theories were put forward for today's business ranging from a recent underperformance of gold mining stocks relative to the price of gold, to industry consolidation that might put this company in the spotlight," said Andrew Wilkinson, senior market analyst at Interactive Brokers Group in Greenwich, Connecticut.
The options volume was spread across various exchanges as there were 2.7 times as many calls traded as puts in the session, Wilkinson added.
In all, a total of 32,141 calls compared with 12,633 puts traded in Newmont, far above its normal volume of 24,913 contracts, according to market research firm Track Data.
Although Newmont shares fell, that did not deter active interest in its longer-dated calls, with strike prices nearly $5 above the gold miner's share value.
A steady slew of call buyers helped keep the price of the calls allowing investors to buy Newmont shares at $45 a piece by mid-December buoyant throughout the day.
More than 20,000 contracts moved in the December $45 call series compared with previous contracts outstanding of 12,350, indicating new positions were initiated.
"Our computers show that Newmont opened at $41 and these calls opened for $1.65," said Jon Najarian, co-founder of Web information site optionmonster.com in Chicago.
But as Newmont shares were down 50 cents, the calls were still trading at $1.65 a contract.
"This is evidence of a volatility expansion in the December options of some 16 percent from Friday," Najarian said.
The December $45 calls closed at $1.65 a contract, up a nickel -- a bullish anomaly for a stock down on the day, said Jay Shartsis, director of options trading at R.F. Lafferty & Co, an options trading firm in New York.
In addition, they were priced significantly above their theoretical value of $1.33.
"These calls were also very active, another bullish omen for the stock," Shartsis said. (Additional reporting by Steve James in New York)
Mon Aug 27, 2007 6:32PM EDT
By Doris Frankel
CHICAGO, Aug 27 (Reuters) - Investors flocked to Newmont Mining Corp (NEM.N: Quote, Profile, Research) calls hoping to catch a share rally within the next few months as the stock of the world's No. 2 gold producer fell on Monday.
Newmont was not immediately available to comment on the unusual option activity.
The shares of Denver-based Newmont dropped 1.72 percent, or 71 cents, to close at $40.45. Its stock was at $52.64 last September, but slipped to hit a 52-week low of $38.01 on Aug. 16.
The catalyst for the heightened bullish option activity was not clear, analysts and traders said.
"Various theories were put forward for today's business ranging from a recent underperformance of gold mining stocks relative to the price of gold, to industry consolidation that might put this company in the spotlight," said Andrew Wilkinson, senior market analyst at Interactive Brokers Group in Greenwich, Connecticut.
The options volume was spread across various exchanges as there were 2.7 times as many calls traded as puts in the session, Wilkinson added.
In all, a total of 32,141 calls compared with 12,633 puts traded in Newmont, far above its normal volume of 24,913 contracts, according to market research firm Track Data.
Although Newmont shares fell, that did not deter active interest in its longer-dated calls, with strike prices nearly $5 above the gold miner's share value.
A steady slew of call buyers helped keep the price of the calls allowing investors to buy Newmont shares at $45 a piece by mid-December buoyant throughout the day.
More than 20,000 contracts moved in the December $45 call series compared with previous contracts outstanding of 12,350, indicating new positions were initiated.
"Our computers show that Newmont opened at $41 and these calls opened for $1.65," said Jon Najarian, co-founder of Web information site optionmonster.com in Chicago.
But as Newmont shares were down 50 cents, the calls were still trading at $1.65 a contract.
"This is evidence of a volatility expansion in the December options of some 16 percent from Friday," Najarian said.
The December $45 calls closed at $1.65 a contract, up a nickel -- a bullish anomaly for a stock down on the day, said Jay Shartsis, director of options trading at R.F. Lafferty & Co, an options trading firm in New York.
In addition, they were priced significantly above their theoretical value of $1.33.
"These calls were also very active, another bullish omen for the stock," Shartsis said. (Additional reporting by Steve James in New York)
