Bulls Mining Alpha Natural Resources

By Mike Yamamoto, managing editor of OptionMonster

NEW YORK ( Option Monster) -- Coal miners have been showing signs of life after getting hammered all year, and bullish traders are now focusing on Alpha Natural Resources ( ANR).

More than 12,000 September 7 calls traded in a strong buying pattern Wednesday as prices doubled from 12 cents to 24 cents, according to OptionMonster's real-time tracking systems. The volume was well above the strike's previous open interest of 8,648 contracts, indicating that new positions were initiated.

These calls lock in a $7 purchase price for the stock through mid-September no matter how far it might rise, but they will expire worthless if ANR remains below that level. Wednesday's action followed heavy short-term call buying in contracts that expired last Friday, which resulted in many trades that saw exponential gains.

Alpha Natural shares rose 5.51 percent yesterday to close at $6.13. The stock began the year above $10 but trended steadily lower until finding recent support around $5, and it has risen sharply while breaking above its 50-day average in the last week.

Total option volume in the name yesterday was more than triple its daily average for the last month. Overall calls outnumbered puts by 5 to 1, further reflecting the session's bullish sentiment.

Yamamoto has no positions in ANR.
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.

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