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Trade sees rise in gold miners ETF

Chris McKhann (chris.mckhann@optionmonster.com)

A combination spread is looking for gains in the Market Vectors Gold Miners Fund as shares bounce off three-year lows.

A trader bought 4,300 June 39 calls for $2.28, above the listed ask price at the time, and sold 4,300 June 44.50 calls for the bid price of $0.63. Just after that, 4,000 June 34 puts traded for $0.90, according to optionMONSTER systems.

If the June 34 puts were bought, as they appear to have been, the trade is a strangle position that is positioning for a further bounce in the exchange-traded fund, at least up to the $44.50 strike price. If those puts were sold, which would be a more typical strategy, they are using the sale to help offset the cost of those long calls. (See our Education section)

The GDX is up 2.2 percent today to $38.25, a day after our systems showed enormous last-minute call buying in three gold miners. The exchange-traded fund has been trended down from resistance at $55 since September and yesterday fell to $37.39, its lowest level since the middle of 2009. 

More than 44,000 GDX options have alread traded so far. 

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