Options: Call Buyer in Gold Fields

By Jud Pyle, CFA, chief investment strategist for the Options News Network

Looking at the January 2010 17.5 strike calls in Gold Fields (GFI Quote), we find that they have traded 10,000 times so far today vs. current open interest of 448 for a price of around $1. What is interesting about this call activity is that most of the activity is from buyers of the options.

The majority of these options traded for $1 today. In order for these calls to be profitable at expiration, the stock needs to be higher than $18.50, which is the strike of the call, plus the premium that was paid for the calls. That price level is higher than shares of GFI have ever been in the last year. ...