Hecla Mining rallied along with other precious-metal producers yesterday, and traders are digging for more gains in the next month.
About 7,500 July 3.50 calls were bought for $0.05 to $0.12 yesterday, according to optionMONSTER's Heat Seeker tracking system. The volume was far above previous open interest of just 562 contracts, showing that new positions were established.
These long calls lock in the price where the stock can be purchased through mid-July no matter how far it might climb. They could be sold earlier at a profit if premiums rise with a rally before then, providing potentially significant leverage, but the contracts could quickly lose value if shares stall or pull back. (See our Education section)
HL rose 6.69 percent yesterday to close at $3.35. The gold and silver miner fell to $2.71 at the end of May--just above its low of $2.63 from Dec. 20, the lowest price since July 2009--but has been rebounding since.
Total option volume in the name topped 16,700 contracts yesterday, nearly 6 times its daily average for the last month. Overall calls outnumbered puts by a bullish 8-to-1 ratio.
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