Puts chase decline in junior gold miners
At least one trader apparently believes that the Market Vectors Junior Gold Miners Fund may continue its recent downtrend.
optionMONSTER's monitoring system detected the sale of 3,000 January 49 puts for $9.40 and the purchase of 3,000 January 39 puts for $3.50 yesterday. Volume was below open interest in the higher contracts, indicating that a trader is taking some profits and rolling a bearish position to a lower strike.
Long puts lock in the price where a stock can be sold, so they make money if shares decline. Investors use them to hedge long positions or to speculate on a drop. (See our Education section)
GDXJ rose 3.24 percent to $45.28 yesterday but is down 3 percent in the last month. Overall option volume was about average in the fund, but puts outnumbered calls by a bearish 3-to-1 ratio.
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