Gold Miners Dim in Option Traders' Eyes

By David Russell, reporter at OptionMonster

NEW YORK (TheStreet) -- The gold bulls were strong enough to push bullion prices back from a big opening drop Friday, but option traders were less enthusiastic about the companies that extract the metal.

Call-selling dominated the action in miners such as Goldcorp(GG Quote), Barrick Gold(ABX Quote), and Iamgold(IAG Quote), which dropped on Friday after posting big November rallies. Most of the options volume was within existing open interest, so the trades may have resulted from investors selling calls they already owned or writing new contracts against holdings of the company shares.

Despite options volume falling below average in the three stocks, nearly 11,000 calls were sold, which is about 40% more than the sum for a typical session. OptionMonster's tracking programs found the opposite was true for puts, in which the estimated proportion of purchases was twice its normal level.

Goldcorp and Barrick Gold have more than doubled from their March lows, returning to the levels where they traded in July 2008. Iamgold, with less than a third of the market cap, has been exploding out to new highs and is up more than 500% from its lows last year.

Gold prices shook off initial jitters on Friday after the U.S. dollar rallied on concerns about Dubai World missing debt payments. The SPDR Gold Shares (GLD Quote) exchange-traded fund, which tracks bullion prices, had similar options activity as the miners on Friday.