Paramount Gold & Silver is drawing an interesting put trade as it hovers near lows.
PZG is up 1.3 percent--or $0.03--to $2.37. The shares bounced off support near $2 at the end of 2011 but remain in a downtrend with lower highs since hitting a 52-week high of $4.52 in March.
Today's option volume in the mining company is just over 3,700 contracts, almost 10 times its daily average. Most of this is in the June 2.50 strike, which saw more than 3,000 puts sold against open interest of 1,671 contracts at bid prices of $0.56 and $0.55.
While there are some blocks of up to 200 contracts, it appears that this activity may be the result of a newsletter recommendation or auto-trading in smaller amounts.
The put selling is an interesting trade with such a low-priced stock. The trader can only lose $1.95 if the stock is worthless in coming months, but the return is essentially $0.23 if the stock is unchanged or higher. (See our Education section)
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