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Trader sees limited upside in Kinross

David Russell (david.russell@optionmonster.com)

Kinross Gold is trying to bounce, but one big investor's expectations aren't very high.

optionMONSTER's tracking programs detected the sale of 9,400 August 8 calls for $0.62 and the purchase of an equal number of May 9 calls for $0.16. Volume was below open interest in May, indicating that an existing short position was rolled from one strike to the other.

He or she probably owns shares in the moribund gold miner, which has already lost one-fifth of its value so far this year and is using the options as part of a covered call strategy. The unusual aspect of today's transaction is that trader rolled the position to the lower strike, agreeing to unload KGC for $1 less.

The investor collected a credit of $0.46 in the process and is now committed to staying in the position for another month. Similar activity occurred earlier this week in names such as Yamana Gold and AngloGold Ashanti. (See our Education section for more on how options can be used to manage trades.)

KGC is up 0.13 percent to $7.87 in early afternoon trading. Total option volume is twice the daily average so far, with calls outnumbering puts by 17 to 1.

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