Option traders are mining large gains in Northern Dynasty Minerals.
On July 6, Investitute’s proprietary programs cited the purchase of 10,900 November $1.50 calls for $0.30 with shares at $1.26. These were clearly new positions, as open interest in the strike was 2,706 contracts before the activity appeared.
Those calls traded for $0.70 this morning, more than double their purchase price. The stock soared 75.4 percent in the same time period, illustrating the kind of leverage that can be achieved with options.
Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.
NAK ended today down 1.83 percent to $2.14 after hitting $2.24 right after the open. The precious-metals miner has risen with moves to ease federal environmental restrictions on the company.