Gold Fields Limited (ADR) (GFI) Call Volume Soars as Gold Stocks Suffer

Gold Fields Limited (ADR) (NYSE:GFI) call volume is at an annual high, as the stock suffers with gold prices

Nov 23, 2016 at 2:46 PM
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Gold prices are crumbling today, as a round of mostly upbeat economic data seemingly strengthens the case for a December rate hike from the Fed. As a result, gold stocks are suffering, with Gold Fields Limited (ADR) (NYSE:GFI) down 2.6% at $3.05. And while GFI has lost a foothold atop its +10% year-to-date breakeven mark, call players are blasting the stock's options pits -- betting that the gold shares will bounce back over the next two months.

By the numbers, more than 67,200 GFI call options have traded so far -- 150 times what's typically seen at this point in the day -- compared to fewer than 2,700 put options. What's more, both total options volume and call volume have easily surpassed their previous 52-week highs set on Sept. 12.

Drilling down, nearly all of the day's call volume has centered at the January 2017 3-strike call. With 62,664 contracts traded here, this GFI strike is the third most active option of the day -- sitting just behind the Financial Select Sector SPDR ETF's (XLF) March 23 and 24 calls, where a respective 83,707 and 82,898 contracts are on the tape. It seems safe to assume new positions are being purchased here -- a theory echoed by Trade-Alert -- indicating call buyers expect GFI to chart a higher path north of $3 by the close on Friday, Jan. 20, when the back-month options expire.

Today's attention to the January 2017 series only mirrors the withstanding trend seen in GFI's options pits. In fact, each of the stock's top 10 open interest positions reside in this series. The January 2017 4-strike call is at the top of the list, with 12,319 contracts outstanding -- although it's not entirely clear whether these positions have were on the long or short side when initiated.

Looking at the charts, today's negative price action is just more of the same for the gold stock. Since topping out at a three-year high of $6.60 in mid-August, the shares of Gold Fields Limited (ADR) (NYSE:GFI) have shed almost 54% of their value. Plus, with today's drop, GFI is on track for its lowest daily close since Jan. 22.

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