What's behind Newmont put action

optionMONSTER

A large put trade topped the option volume in Newmont Mining yesterday.

optionMONSTER systems show that 9,494 January 25 puts were sold for $2.78 against previous open interest of more than 13,000. The same number of January 23 puts were bought for $1.99 in volume far above open interest of 1,457 at that strike, indicating new activity.

It is possible that this is a credit spread if both sides of the trade are new positions. In that case, the trader will keep a small credit as profit if NEM remains above $25 through expiration in mid-January. But it is more likely that the trader is rolling an existing put position to a lower strike price, reflecting the recent drop in shares and positioning for another leg down. (See our Education section)

NEM fell another 1.7 percent to $26.61 yesterday, its worst close since November 2008. Shares of the gold and copper producer, which were above $70 at the end of 2011, have been cut in half just since last October.

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