Bulls like metals and mining fund
Traders are looking for the SPDR Metals and Mining Fund to rebound from a seven-month slump.
optionMONSTER's Heat Seeker system detected the purchase of 2,000 May 28 calls for $0.39 and about 1,0000 May 29 calls for $0.20 yesterday. Volume was far above the previous open interest in both strikes, showing that these are new positions.
Long calls lock in the price where investors can buy a stock, which lets them position for a rally with limited capital. That can be safer than purchasing shares directly because only the cost of the options can be lost on a pullback. The calls can be sold anytime before they expire but will lose value if the stock falls. (See our Education section)
The XME fell 0.93 percent to $26.64 yesterday. The exchange-traded fund fell sharply from the $44 level last September and hit a six-year low of $25.41 on March 16 but has been trading sideways since.
Yesterday's overall XME option volume was nearly triple its daily average for the last month. Total calls outpaced puts by a bullish 5-to-1 ratio.
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