Pretium Resources is near all-time lows, and one trader is looking for a sharp move up or down in the precious-metals producer.
optionMONSTER systems show that a trader was buying March 2.50 puts yesterday, paying $0.60 for large blocks adding up to 15,500. This is clearly a new position, as open interest in the strike was a mere 70 contracts before the trade appeared.
Shortly afterward, a block of 286,000 shares was bought for $3.68. The combination of stock and puts creates a delta-neutral play that would profit from higher volatility than that implied by the options, rather than a specific directional move. (See our Education section)
PVG lost 3.01 percent yesterday to close at $3.54. The Canadian company was above $10 in late August but hit a lifetime low of $3.04 last week.
Overall option volume in the name was 16,513, topping the total open interest and eclipsing the daily average of 648 contracts.
see this bit - "The combination of stock and puts creates a delta-neutral play that would profit from higher volatility than that implied by the options, rather than a specific directional move." This is a call for volatility in the shares, not bullish, not bearish, just pretty sure that the current price is unstable and that we will see fairly wide swings.
This is bull call because we are pretty low end and much near to zero. Best selling puts can make 2.50 -.60 cents is 1.90$ Cents if PVG goes to 0 or exercise puts and unload shares bought. But, on the other hand upside is huge (person thinks that dark cloud will be over by March 2014 and no longer needs protection)