Put Volume Revs Higher on Randgold Resources Ltd.

Randgold Resources Ltd. (GOLD) drew heavy put volume on Monday, with activity rising to twice the usual level. During the course of the session, traders on the International Securities Exchange (ISE) bought to open 1,592 puts on GOLD, compared to just 162 calls. In other words, speculators snapped up nearly 10 times more puts than calls on the commodity concern.

Monday's skew toward skeptical options was part of a growing trend for GOLD, which now sports a 10-day ISE put/call volume ratio of 1.12. This ratio ranks higher than 86% of other such readings taken during the previous year, indicating that puts have rarely been purchased over calls at a faster pace.

This rising preference for pessimistic positions is out of line with a recent plunge in short interest. The number of GOLD shares sold short plummeted by more than 33% during the most recent reporting period, suggesting that bearish stock traders are hitting the exits en masse.

In fact, the downbeat sentiment on display in the options pits is also out of line with GOLD's technical performance. The stock is up nearly 92% year-to-date, and it recently broke through short-term resistance in the $76 neighborhood. Now, the shares are resting easy above support from their 10-day, 40-day, and 80-day moving averages.

After taking a closer look at GOLD's technical performance, as well as the rest of the stock's sentiment backdrop, it seems hard to believe that option traders are truly feeling so bearish. Instead, it seems reasonable to assume that some of these puts are being purchased simply to hedge long stock positions.

 Email to a Friend

 Del.icio.us

 Facebook

 Reddit

 Newsvine

 Digg

 Mixx