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What's behind Southern Copper puts

Chris McKhann (chris.mckhann@optionmonster.com)

A large put trade tops today's option activity in Southern Copper.

optionMONSTER systems show that more than 12,000 SCCO options have traded so far, compared to an average of just 827 in the last month. Almost all of the action is in one put strategy.

More than 5,000 each of the June 32 puts and August 30 puts have changed hands in combination trade. The big block of June puts was sold for the bid price of $1.20 against open interest of 6,341 contracts. The August 30 puts were bought for their ask price of $1.35 in volume that was far above that strike's open interest of just 51, indicating new activity.

The trader appears to be rolling a long-put position to a lower strike in later-dated contracts. This could be a hedge on a long position, but that is less likely given how far the $32 puts are in the money . So this appears to be an outright bearish bet that the mining company will fall below $30 by expiration in mid-August.
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SCCO is down 0.45 percent to $31.18 this morning, near its lowest levels in the last year. Shares were up at a high of $42 at the end of January.

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