Calls surge fourfold in $PVG

Unusual option activity in Pretium Resources paid off big today.

Two months ago, Investitute’s tracking systems detected bullish trades in the same PVG strike on on two consecutive sessions:

–On May 11, 3,200 September $8 calls were bought for $0.50 to $0.65 above open interest of 31 contracts, with shares at $7.24.

–On May 14, 4,100 September $8 calls bought for $0.60 and $0.65 above open interest of 4,030 contracts, with shares at $7.14.

Those calls sold for $2.09 today, quadruple their initial purchase price. The stock rallied 35.5% in the same time period, illustrating how options can far outperform their underlying shares.

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.

PVG spiked higher by 14.57% to $9.28 today. The Canadian gold and silver miner updated production guidance this morning.