NEW YORK -- Iamgold (IAG) has seen its share price halved in the last three months, but traders are looking for a rebound.
OptionMonster's Heat Seeker system showed that almost 17,000 March 3 calls were bought Friday for 10 cents to 15 cents. The volume dwarfed the previous open interest of 1,253 contracts, which indicates that new positions were initiated.
These long calls lock in the price where investors can buy shares in the gold and silver miner. That can be safer than owning stock because only the cost of the options can be lost if shares continue to drop. Conversely, a rally could generate significant leverage on a percentage basis.
IAG surged 15% to $1.96 on Friday but is down from near $4 in late August. The Toronto-based company reports its next quarterly results after the close on Wednesday. Miners have been among the best-performing groups in recent sessions as the U.S. dollar weakens, according to our ResearchLab market-analysis tool.
Friday's total option volume in Iamgold was eight times its daily average for the last month. Overall calls outnumbering puts by 48 to 1, a reflection of the session's bullish sentiment.
Yamamoto has no positions in IAG.
-- Written by Mike Yamamoto of OptionMonster