Coal miners have been showing signs of life after getting hammered all year, and bullish traders are now focusing on Alpha Natural Resources.
More than 12,000 September 7 calls traded in a strong buying pattern yesterday as prices doubled from $0.12 to $0.24, according to optionMONSTER's Heat Seeker real-time tracking system. The volume was well above the strike's previous open interest of 8,648 contracts, indicating that new positions were initiated.
These long calls lock in a $7 purchase price for the stock through mid-September no matter how far it might rise, but they will expire worthless if ANR remains below that level. Yesterday's action followed heavy short-term call buying in contracts that expired last Friday , which resulted in many trades that saw exponential gains. (See our Education section)
ANR rose 5.51 percent yesterday to close at $6.13. The stock began the year above $10 but trended steadily lower until finding recent support around $5, and it has risen sharply while breaking above its 50-day average in the last week.
Total option volume in the name yesterday was more than triple its daily average for the last month. Overall calls outnumbered puts by 5 to 1, further reflecting the session's bullish sentiment.
(A version of this post appeared on InsideOptions Pro yesterday.)
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