Mid-day Flow Summary: General Sentiment, NEM, ABX & GG
General Sentiment
Most averages remain near unchanged at midday and the option volume is in line with recent levels. Nearing noon, a total of 2.1 million calls have traded versus 1.7 million puts for a somewhat bullish bias.
Gold Stocks (NEM, ABX, GG)
We are seeing elevated activity in the Gold sector options today, with triple the recent volume levels. Consistent buyers of calls are dominating the flow. An aggressive buyer has appeared in Barrick Gold (ABX) Jan-08 35 calls, lifting more than 7,000 for prices from $3.10 to $3.80. The stock is trading up 7% to $35.70. Newmont (NEM) is also seeing upside call buyers, most notably in the Jan-08 45 calls. NEM stock is currently up nearly 5% to $44.28.
Goldcorp (GG) is also unusually active, with 22,000 contracts traded before noon, or nearly 4 times the normal pace for this stock. Traders in GG are focusing on the Sept 25 calls which were bought at prices from $.55 to recent levels near $1.20. Gold trading above $700/ounce is leading the sector surge.
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About Henry Schwartz
Henry Schwartz has traded derivatives on US and European exchanges for nearly 20 years. His experience includes market-making and institutional trading at the Hull Group, Salomon Brothers, Bear Stearns and most recently Banc of America Securities, where he led the electronic market-making project coincident with the launch of the ISE. His current work involves real-time stream analysis of options market activity for a number of leading institutional sell-side firms.
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