Upside trade in First Majestic Silver

Mike Yamamoto (
August 22, 2014

At least one trader apparently believes that First Majestic Silver will rebound in the next two months.

optionMONSTER's Heat Seeker system detected the purchase of 2,000 October 10 calls for $0.45 in less than 10 minutes late yesterday. The volume was above the strike's previous open interest, indicating that this is a new position.

These long calls lock in the price where the stock can be purchased through mid-October 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 will expire worthless if shares remain below $10. (See our Education section)

AG was down 1.62 percent to $9.72 yesterday. The silver miner fell sharply from $11 after reporting quarterly results on Aug. 13 and has trying to find support at current levels around its 100-day moving average.

Yesterday's total option volume in the name was more than triple its daily average for the last month. Overall calls outnumbered puts by a bullish 20-to-1 ratio.

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