Huge OI there; over 75,000 contracts. There is no other strike or month that even come close to that #. That represents over 7.5 million shares. If stock ever starts to tick of 2.5, mm will be forced to buy that amount of shares. Positve news here could be a super charged catalyst. MM will do there best to keep cap on stock. Why is OI so large in that front month? Buyers of that option are highly leveraged to good news. If one knew something, thats the one to buy. Buyout? Positve news on mine(s).
These calls are directly related to the share offering from earlier in the year. From a post I put up earlier...
"PZG sold 10,417,776 shares on 3/30 (Friday). The following week, 35,790 (Tuesday) and 30,670 (Wednesday) of the Sept 2.50 calls were traded which makes up the bulk of OI. There was also close to 4M shares traded on that Tuesday. All of this has to be related."
Seems to me that at least one of the big share buyers sold these calls. San Miguel's PEA was always targeted for late 2012, so selling the Sept calls made a lot of sense. Mexico is really the opportunity here. Sleeper doesn't get built unless gold is way higher. Also noticed that Peak6 established a position and they are big options players.
If Guadalupe production is good in 2013 for CDE, then PZG becomes a takeout target.
So I see Sept expiration with the stock very close to 2.50 unless precious metals escape their trading range, which seems like it could happen.
Downside is that there really won't be much news until Mexico PEA which will probably get delayed into spring 2013.
Some of it clearly has to do with South Africa and its absolute NEED to give in to NUM again.
Major moves in the sector often correspond with big jump in South African wages - in order to keep African people from being killed, in this case. This is an historical fact, and any sector observer may just go back through the history and see it.
But we are also about to have some major M&A involving components in the XAU and TSX Gold indices - which only happens every few years.
And re Silver: New vehicles in Asia and elsewhere. LME move to Hong Kong. Chinese allowing Interbank swaps. Rumors of various Asian countries - and soon Russia? - using Silver as part of their formal reserves.
Plus JPM being dragged kicking and screaming into more compliant behavior in the wake of the London Whale and other matters.
So at this point, Silver leading Gold seen as less of a problem by the PTB than Gold leading Silver.