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Seabridge traders digging for gold

Mike Yamamoto (mike.yamamoto@optionmonster.com)

Seabridge Gold has rebounded sharply in recent weeks, and traders are looking for even more gains.

optionMONSTER's Heat Seeker system found heavy buying in the November 14 calls as more than 4,300 traded for $0.34 to $0.53 yesterday. Open interest was just 90 contracts before the session began, showing that these are new positions.

These long calls lock in the price where the stock can be purchased through mid-November no matter how far it might climb. They could be sold earlier at a profit if premiums rise with a rally before then, providing potentially significant leverage, but the contracts will expire worthless if shares remain below $14. (See our Education section)

SA gained 4.09 percent yesterday to close the regular session at $11.19 and rose another 2.31 percent in after-hours trading. The Toronto-based gold miner bounced off several key moving averages at the $8 level late last month and has been rising since.

Total option volume in Seabridge topped 10,000 yesterday, 10 times its daily average for the last month. Overall calls outnumbered puts by 25 to 1, reflecting the session's bullish bias.

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