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Bulls hope to climb Turquoise Hill

Mike Yamamoto (mike.yamamoto@optionmonster.com)

Mining companies have been trying to make a comeback in recent days, and traders turned their attention to Turquoise Hill Resources last week.

More than 3,500 March 6 calls were purchased for $0.64 to $0.70 on Friday, according to optionMONSTER's Heat Seeker real-time tracking system. This is clearly fresh buying, as open interest in the strike was just 722 contracts when the session began.

These long calls lock in a $6 purchase price for the stock though mid-March no matter how far it might rise. They could be sold earlier at a profit if premiums rise with a rally before then, but these contracts could also expire worthless if shares remain below that level in the next seven months. (See our Education section)

TRQ was up a penny at the end of the session to close at $5 even. The stock has been beaten down with the rest of the sector but bounced at $4 at the end of July and has been trying to break free of resistance at current levels.

The company, formerly known as Ivanhoe Mines and now a subsidary of Rio Tinto, is based in Canada but operates primarily in the massive Oyu Tolgoi site in Mongolia. It reported second-quarter results on last Monday, but the stock barely budged on those numbers.

Total option volume in the name topped 6,700 contracts on Friday, more than double its daily average for the last month. Overall calls outnumbered puts by 5 to 1, reflecting the session's bullish sentiment.

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