Education
Bulls mine profits from $AU
Option traders have nearly tripled their money on upside positions in AngloGold Ashanti (AU). On July 8, Investitute’s market scanners identified the purchase of 13,733 October $19 calls for $1.42 as part of a bullish roll with shares at $18.31. Open interest in the strike was only 620 contracts before the trade occurred, showing that […]
Option traders have nearly tripled their money on upside positions in AngloGold Ashanti (AU).
On July 8, Investitute’s market scanners identified the purchase of 13,733 October $19 calls for $1.42 as part of a bullish roll with shares at $18.31. Open interest in the strike was only 620 contracts before the trade occurred, showing that this was a new position.
Those calls traded for $4 today, almost 3 times their purchase price. The stock rose 23.8% in the same time period, a large move but nowhere near that of its options on a relative basis.
Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.
AU is unchanged at $22.53 in afternoon trading. The South African gold miner has rallied along with the price of precious metals recently.