Gulf Resources, Inc. (GURE) Rally Triggers Bullish Betting

Gulf Resources, Inc. (GURE) has more than doubled today, but is facing familiar resistance

Jan 30, 2015 at 11:17 AM
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China-based commodity concern Gulf Resources, Inc. (NASDAQ:GURE) has more than doubled today, up 130% at $2.70, after the firm said it discovered natural gas resources at a Sichuan bromine well. Against this backdrop, option bulls are flocking to GURE in droves, gambling on even more upside for the equity.

Intraday call volume is running at nearly 300 times the norm, and has more than doubled GURE put volume thus far. The now in-the-money 2.50 strike is a hot bet, with buy-to-open action detected at the February-, April-, and July-dated calls. By purchasing the contracts to open, the buyers expect GURE to continue its ascent north of $2.50 through the options' respective lifetimes.

In light of today's surge, delta on the February 2.50 call has skyrocketed to 0.59 from 0.11 at yesterday's close, reflecting the growing odds of the contract expiring in the money on Friday, Feb. 20. Likewise, delta on the April 2.50 call has soared to 0.61 from 0.17, and delta on the July 2.50 call sits at 0.65, compared to 0.22 last night.

Today's appetite for bullish bets on GURE marks a change of pace among short-term option players. The security's Schaeffer's put/call open interest ratio (SOIR) of 1.06 sits just 3 percentage points from an annual peak, implying that near-term speculators are more put-heavy than usual right now.

Just last month, Gulf Resources, Inc. (NASDAQ:GURE) touched an annual low of $1. Today, the security's upside momentum stalled in the $2.85 area, which has contained GURE's rally attempts on several occasions over the past few years.

Weekly Chart of GURE since July 2011
 

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