Inside Today's Monster Kinross Gold Corporation (KGC) Options Trade

Kinross Gold Corporation (USA) (KGC) call options are trading at 16 times the usual intraday clip

by Alex Eppstein

Published on May 27, 2016 at 1:04 PM

Kinross Gold Corporation (USA) (NYSE:KGC) call options are flying off the shelves, even as the gold stock sells off sharply. At last check, the contracts are trading at 16 times the expected intraday rate, with 80,000 on the tape -- compared to just 365 put options. In fact, call volume ranks in the 100th percentile of its annual range, nearly doubling its previous annual high from Feb. 25.

The options activity is being fueled by one KGC trader, in particular. According to Trade-Alert, the speculator bought to open a block of 37,000 out-of-the-money August 5 calls for $0.40 apiece -- resulting in a cash outlay of nearly $1.5 million (premium paid * number of contracts * 100 shares per contract). To offset the cost, he also likely sold to close a block of 42,000 January 2017 6-strike calls.

Today's call buying preference is business as usual for KGC. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the gold stock has amassed a 10-day call/put volume ratio of 19.93 -- with nearly 20 calls bought to open for each put. What's more, this ratio registers in the high 70th percentile of its annual range.

It's hard to blame options traders for betting bullishly on Kinross Gold Corporation (USA) (NYSE:KGC). After all, the gold stock has been a technical phenom in 2016. While the shares have shed 2.9% this afternoon to sit at $4.38 amid a pre-Yellen slump in gold prices, they're up over 140% on a year-to-date basis.

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