This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Jaguar Mining Call-Buyers Pounce

By Pete Najarian, co-founder of OptionMonster

NEW YORK ( OptionMonster) -- Traders are digging for gold in Jaguar Mining (JAG).

The mining company received a $1 billion acquisition offer from China Shandong Gold in November, valuing Jaguar at $9.30 a share and prompting a strategic process to explore alternatives. But Jaguar's CEO resigned in December, and the stock dipped back under $7 after the firm indicated that the review process may not end in a definite transaction.

Option activity has been interesting in the last month and really lit up Friday morning. Traders were buying the June 8 calls for 80 cents while selling the June 10 calls for 15 cents. This call-spread traded more than 5,000 times.

The position allows traders to buy Jaguar shares for $8 but obligates them to sell it for $10 if the stock goes above that level. The bet cost 65 cents, so they'll earn more than 200% if the stock rallies to $10 or higher.

Traders use this type of "vertical spread" -- buying calls at the lower strike and selling the higher strike -- to offset the cost of establishing the position, though it limits upside potential.

Jaguar's stock rose 1.68% to $7.28 on Friday and is up 15% in the last month as buyers return to the gold-mining space in general.

More than 13,000 Jaguar calls traded versus just 1,300 puts in the session, a reflection of the bullish sentiment. Total option volume was nearly five times average levels.

Najarian has no positions in JAG.
This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
JAG $0.00 0.00%
AAPL $95.03 0.21%
FB $116.73 0.00%
GOOG $691.02 0.00%
TSLA $247.54 -0.07%


Chart of I:DJI
DOW 17,830.76 -210.79 -1.17%
S&P 500 2,075.81 -19.34 -0.92%
NASDAQ 4,805.2910 -57.85 -1.19%

Free Reports