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Buyer won't give up on AngloGold

Mike Yamamoto (mike.yamamoto@optionmonster.com)

AngloGold Ashanti has lost more than 60 percent of its market value in the last year, but one large trader is still hoping for a rally.

optionMONSTER's Heat Seeker system detected the purchase of 4,936 January 16 calls for $0.60 in less than 4 minutes yesterday. This is clearly a new position, as open interest in the strike was 1,140 contracts before the trade appeared.

These long calls lock in the price where the stock can be purchased through mid-January no matter how far it might climb. They could be sold earlier at a profit if premiums rise with a rally before then, but the contracts will expire worthless if shares remain below the $16 strike price. (See our Education section)

AU fell 3.01 percent yesterday to close at $12.88. The South African gold miner, which was trading above $34 last fall, hit an all-time low of $11.62 on Aug. 7 and has been range-bound mostly between $12 and $15 since.

Total option volume in the name yesterday was more than triple its daily average for the last month. Overall calls outnumbered puts by a bullish 11-to-1 ratio.

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