Bet on drop in silver through year’s end.
A spike in put option buying on the Pan American Silver Corp (PAAS) December 20th $15 put options resulted in over 6,000 options trading hands against an open interest of 176—a 34-fold surge in volume.
With shares trading at $16.30, the option bet will move in-the-money if shares drop just $1.30, or about 8 percent. Given the volatility in metals markets, such a swing is easily achievable within the next 52 days before expiration.
- Breaking News: Market Takeover In Effect (Claim your share!)
Goldman Sachs, JP Morgan, Citigroup, and all the big funds are getting pummeled by the all new Robinhood Effect sending some stocks to the moon...
Whenever a stock falls below fair value… the Robinhood Effect happens… and it happens FAST… and it could pay the likes of $1.83 million to regular investors.
At a price of $0.55, the option buyer needs shares to move to about $14.50 before profiting. Based on the company’s 52-week range, shares could drop as low as $10 on a bearish outlook for silver.
Action to take: Precious metals look set to drop against a strong earnings season and a potential trade deal that could revive slowing growth. Even if you own shares of the company, buying the put option (or selling a covered call on your shares), looks like a decent year-end hedge trade to make here.
Depending on the speed and severity of a drop in precious metals, this December option looks like it could give investors up to $2 in total, quadrupling the original stake. Traders have a fairly good record with swings in this company.
However, investors who expect a slower and longer overall drop may want to make an options trade such as the April 2020 $15 puts, which could go from their current $1.50 to $5 if shares drop to their old 52-week low near $10.