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Huge downside play in Iamgold

Chris McKhann (chris.mckhann@optionmonster.com)

A huge trade appears to be positioning for another leg lower in shares of Iamgold.

optionMONSTER's Depth Charge system shows that 94,245 June 3 puts were sold for $0.06 yesterday, clearing out almost all of the previous open interest of 94,576. At the same time, the trader bought 104,750 September 3 puts for $0.23 in volume that dwarfed that strike's open interest of just 761 contracts.

It is possible that this is a new calendar spread that is looking for IAG to be right around $3 at expiration in mid-June, but it is far more likely that the trader is rolling an existing put position from June to September. The trader would then be betting on a pullback or hedging a large position in IAG. (See our Education section)

IAG fell 3.42 percent to $3.39 after reporting earnings on Tuesday afternoon, its lowest close since the last day of 2013. The Toronto-based gold miner got as high as $4.37 since then, but shares have been mostly range-bound.

More than 204,000 IAG options changed hands yesterday, compared to its average daily volume of only 1,457 for the last month.

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