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SPECIAL DISCOUNTED MEMBERSHIP RATES UNTIL JUNE 30, 2010
Options Update: Tuesday, June 22, 2010
Gold Fields Limited (GFI) and Yamana Gold Inc. (AUY)
Commodities concerns Gold Fields Limited (GFI) and Yamana Gold Inc. (AUY) have both been popular among call traders, thanks to a potent combination of front-month expiration and gold's second straight session of record highs.Gold Fields Limited (GFI) It appears near-term speculators were cashing in their expiring June-dated options in favor of calls at the July 15 strike on Friday. More specifically, the equity on Friday saw almost 1,100 July 15 calls cross the tape – almost all of which traded at the ask price, suggesting they were bought. Plus, call open interest at the newly front-month strike ticked higher over the weekend, pointing to a fresh batch of bullish bets. Thanks to the recent uptick in open interest, GFI's July 15 strike is now home to almost 9,600 calls outstanding. However, the at-the-money 14 strike remains most popular by just a hair's breadth, with close to 10,000 calls in residence. Nevertheless, with the shares of GFI hovering just shy of the $14 level at last check, this notable accumulation of bullish bets could act as an options-related speed bump for the stock in the near term.
In fact, the $14-$15 neighborhood has been a familiar foe on the charts for GFI. This region consistently capped the stock's rally attempts from mid-2002 until late 2005, and has once again emerged as an area of resistance for the equity. Supporting the stock, on the other hand, has been its 10-month and 20-month moving averages, which haven't both been breached on a monthly closing basis since early 2009.
Yamana Gold Inc. (AUY)AUY, it appears options speculators on Friday liquidated their expiring June 11 calls in favor of July 12 calls, as the latter strike saw about 3,300 contracts change hands. The majority of the out-of-the-money calls traded at the ask price, and call open interest at the newly front-month strike ballooned over the weekend, pointing to newly purchased bullish bets. In light of the action, the July 12 strike is now runner-up as most favorite among short-term call speculators, with more than 16,100 calls in residence. In similar fashion, the deeper-out-of-the-money 13 strike hosts almost 15,800 calls outstanding. Nevertheless, it's the at-the-money 11 strike that's garnered the most attention among near-term call traders, with more than 28,300 calls docked here.
Similar to GFI, this notable accumulation of optimistic positions could act as an options-related roadblock for AUY in the short term. The $11 level has already established itself as a point of contention on the charts, containing all but one of AUY's weekly closes since mid-January. What's more, the stock's 32-week moving average has descended into the neighborhood to act as an added layer of intermediate-term resistance. Meanwhile, the equity has found support in the round-number $10 region, which has limited all but one of the AUY's pullbacks since late August 2009.
However, while both GFI and AUY appear to be locked in their respective trading channels, the latter stock could be vulnerable to analyst wrath. According to Zacks, AUY has earned eight "strong buys" and six "buy" endorsements, compared to four lukewarm "holds" and not a single "sell." In comparison, GFI has earned only one "buy" or better rating, as opposed to two "holds" and a lone "sell." Should the brokerage community take notice of AUY's struggles to perforate the $11 level, a round of downgrades could exacerbate the stock's challenges on the charts.
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Back to Stock Options Made Easy from Option Update for GFI & AUY - June 22, 2010
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