A large call spread is looking for long-term gains in South African miner AngloGold Ashanti.
optionMONSTER's Heat Seeker system shows that two blocks of 6,000 January 2015 20 calls were bought for $2.25 and $2.30. Seconds later, 18,000 January 2015 30 calls sold for their bid price of $0.75. Volume was above previous open interest at each strike, indicating that new positions were established.
This ratio spread uses the sale of additional higher-strike contracts to further offset the cost of the lower-strike long calls . The risk comes if AU runs higher than $30, as the trader would then effectively be short shares at that level. (See our Education section)
AU finished the week at $16.04, up fractionally on Friday. The precious-metals producer was last above $20 in early April and above $30 at the end of 2012, but it has run up from below $13 in the last couple of weeks.
Overall option volume exceeded 31,000 contracts on Friday, nearly 18 times its daily average for the last month. Only 91 puts changed hands in the entire session.
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- AngloGold Ashanti