Bulls go exploring for gold in Eldorago
Traders apparently think that Eldorago Gold is ready to rally.
optionMONSTER's Heat Seeker tracking program on Friday detected the purchase of 2,700 January 2013 15 calls for $2.65 and the sale of an equal number of January 2013 15 puts for $2.50. Volume was more than twice open interest in both strikes.
The trade cost about $0.15 and is heavily leveraged to Vancouver-based miner, which operates in Turkey, China, and Brazil. If EGO rallies, they will make money on the long calls while the puts sold short will lose value. The opposite will happen if shares decline. (See our Education section)
EGO rallied 7.03 percent to $15.05 on Friday and is attempting to bounce at a long-term support level around $13.50. Sentiment has been turning more bullish on gold and silver miners in the last week, which are among the top performing groups among the more than 100 industries tracked by researchLAB .
Friday's bullish trade pushed total options volume in EGO to 8 times greater than average, according to the Heat Seeker. The company's next earnings release is scheduled for the morning of Feb. 24.
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