As the price of gold rebounded yesterday, some traders were looking for a comeback in Eldorado Gold to follow.
More than 1,500 July 6 calls traded in a strong buying pattern yesterday as premiums rose from $1.12 to $1.37, according to optionMONSTER's Heat Seeker tracking system. The volume was 6 times higher than the strike's open interest of just 254 contracts before the session began, indicating new activity.
EGO surged 9.99 percent yesterday to close at $7.38 after opening just above its low of $6.58 from last Thursday, its lowest intraday price since January 2009. Other gold miners rose as well yesterday, apparently on hopes that the beaten-down sector may finally be finding a bottom. (See our Education section)
Yesterday's bullish calls are already in the money and will therefore track the share price closely. These options lock in the price where the stock can be purchased, but their premiums will rapidly decline if EGO falls before they expire in mid-July.
Total option volume in the name was nearly triple its daily average for the last month. Calls outnumbered puts by more than 7.5 to 1, further indication of the session's bullish sentiment.
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