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Dim outlook seen for Kinross Gold

David Russell (david.russell@optionmonster.com)

Sentiment is going from bad to worse in miners like Kinross Gold.

optionMONSTER's trade scanners detected the sale of about 6,300 February 4 calls for $0.77 and the purchase of an equal number of December  6 calls for $0.02. Volume was below open interest in the shorter-dated contracts, which suggests that an existing short position was closed and rolled down.

The move effectively lowers by $2 the price at which the investor must sell shares in the ailing Canadian mining company, so he or she definitely sees very limited upside potential. The trader also collected an incremental $0.75 of income in the process. (See our Education section for more on call selling.)

KGC fell 1.68 percent to $4.67 yesterday and is down 53 percent in the last year. The stock has been making lower highs while sitting at a key support level from 2004 and 2005, which could make some chart watchers think that it's ready to collapse.

Yesterday's call selling also matched similar activity in South African miner Gold Fields as precious metals remain under steady selling pressure.

Total option volume was triple the daily average in KGC.

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