By Jon "DRJ" Najarian, co-founder of OptionMonster
NEW YORK -- The Market Vectors Gold Miners ETF (GDX) drew some bullish option activity Tuesday as traders focus increasingly on precious metals.
The latest volume surge occurred in the July 49 calls on the exchange-traded fund, which tracks several leading gold producers. More than 13,000 of those options traded against previous open interest of 1,002 contracts, indicating that these were new positions.
The largest block of those calls, a single print of 7,500, went for $1.86. Those contracts ended the session trading for $1.93 to $1.96, according to the Heat Seeker.Calls fix the price investors must pay for shares in the fund. They can provide significant leverage, doubling or tripling in price from a move of just 10% in the stock, but can also expire worthless if a rally doesn't occur. The ETF rose 0.42% to $47.53 Tuesday. Plenty of other gold miners have been lighting up our systems as the recent selloff in the industry has brought value hunters out of the woodwork. Total volume in the fund was almost 123,000 contracts, nearly twice its daily average. Najarian owns GDX call spreads.
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