IB Options Brief: Goldcorp, Inc. (GG) & Linn Energy LLC (LINE)

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Stampede Of Bulls Into Goldcorp Calls As Shares Hit Two-Year Highs


GG ñ Goldcorp, Inc.
Shares of the gold mining company are trading up at their highest in more than 2 years, and a number of options traders are betting Goldcorpís shares have more room to run in the near term. Call options on GG are in high demand, with more than 3.1 calls changing hands on the stock for each single put option in action today. Shares in the name are currently up 3.5% at an intraday- and new 2-year high of $49.50.

Investors expecting the price of the underlying to continue to move higher picked up more than 1,750 calls at the March $50 strike for an average premium of $0.84 apiece. Traders exchanged more than 6,600 calls up at the March $52.5 strike versus previously existing open interest of just 537 contracts. The majority of the calls, or roughly 4,500 contracts, were purchased at the March $52.5 strike for an average premium of $0.29 a-pop.

Call buyers at this strike start making money if shares in Goldcorp rally another 6.6% over todayís high of $49.50 to surpass the average breakeven point at $52.79 by March expiration. Options implied volatility on the gold mining company increased 8.0% to 30.88% by 12:45pm.

 

LINE ñ Linn Energy LLC
The oil and natural gas company popped up on our scanners this morning due to options activity in the July contract. The spread appears to be the work of an investor positioning for shares to hit a new 52-week high ahead of expiration. Shares in Linn Energy LLC are down slightly by 0.33% to stand at $38.70 in early afternoon trade.

It looks like the strategist responsible for the transaction sold 2,000 puts at the July $36 strike for a premium of $1.15 per contract in order to buy the same number of July $40 strike calls at a premium of $1.35 apiece.

The net cost of taking the bullish stance on LINE amounts to $0.20 per contract, thus positioning the trader to profit should shares in Linn Energy increase 3.9% over the current price of $38.70 to exceed the effective breakeven price of $40.20 by July expiration. LINN Energyís shares last traded above $40.00 back in May 2007.

 
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