Call activity is surging in producers such as Barrick Gold (ABX), Newmont Mining (NEM), Yamana Gold (AUY), and Goldcorp (GG), which finished yesterday's session up between 4 percent and 7 percent. In ABX and AUY call volume is more than twice the normal level, while it's three times the average for GG.
The bullish trading occurs as the stocks push to their highest levels since early December, which resulted from a big rally in bullion prices after the Greek debt crisis sent investors fleeing the euro.
ABX's January 60 calls were the most active strike, trading more than 11,300 times, mostly for $1.71. The bulk of the volume, however, resulted from sales as investors apparently took profits on existing positions.
Gold miners have been one of the best sectors recently, and were barely affected when most other equities plunged amid last week's panic over Greece. The Market Vectors Gold Miners (GDX) exchange-traded fund is up more than 11 percent in the last month versus a 3 percent drop for the S&P 500. That marks an improvement from the first quarter, when the ETF lagged the broader market.
More than 141,000 contracts traded in GDX yesterday, nearly triple its average volume. Calls outnumber puts on the fund by more than 2.5 to 1, a sign of the bullish sentiment.
Put activity was also largely associated with selling in names such as GDX, ABX, and NEM. That reflects confidence the stocks will hold their ground or move higher.
