Unusual Options Activity in Market Vectors Junior Gold Miners ETF $GDXJ - PowerPoint PPT Presentation

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Unusual Options Activity in Market Vectors Junior Gold Miners ETF $GDXJ

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Recently, there has been some unusual options activity in Market Vectors Junior Gold Miners ETF $GDXJ. – PowerPoint PPT presentation

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Title: Unusual Options Activity in Market Vectors Junior Gold Miners ETF $GDXJ


1
  • OPTIONS TRADING

Unusual Options Activity in Market Vectors Junior
Gold Miners ETF GDXJ
2
Welcome to Options Trading Research Your premier
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Options Trading. For more info on Options Trading
visit our website www.OptionsTradingResearch.com
3
  • Get Your Free Report For The Best Options To Buy
    For 2016!
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  • at the end of the video!

4
  • Hi, My name is Steve and Im with Options Trading
    Research, today were reviewing our recently
    published article

5
  • Unusual Options Activity in Market Vectors Junior
    Gold Miners ETF GDXJ

6
  • As many of you know, unusual options activity can
    be a valuable indicator as to what traders are
    thinking, and more importantly, where these
    stocks are heading in the short-term.

7
  • This is something professional options traders
    pay a lot of attention to, and for good reason
    Unusual options activity can tip off big moves
    in a stock, either up or down.

8
  • So lets take a look at some interesting
    activity that caught our eye this week Market
    Vectors Junior Gold Miners ETF GDXJ is the most
    popular industry ETF for trading junior gold
    miners.

9
  • The ETF trades nearly 10 million contracts a day
    on average. For a good description of the fund,
    follow the link.

10
  • GDXJ is trading at 19.05, down 21 for the
    year. Thats 38 below the 52-week high, and just
    6 above the 52-week low.

11
  • So what does unusual options activity in GDXJ
    tell us?

12
  • Gold has not had a good year. The precious metal
    is down over 10 on the year. Gold miners have
    had it even worse. And junior miners well,
    theyre down over 20 for 2015.

13
  • Basically, gold has been out of favor with a
    strong dollar as a safe-haven alternative and no
    inflation to speak of. Now, the Fed is expected
    to start raising rates this week.

14
  • Not only is that an anti-inflationary action, it
    could also make the dollar even more attractive.
    In other words, there are still plenty of reasons
    to stay away from gold. Heres the deal
    Recently, a large amount of calls traded in GDXJ.

15
  • As a reminder, a call option makes money when the
    underlying stock goes up before its expiration
    date.

16
  • To be more specific, a trader bought a block of
    5,000 19 calls expiring in January. The price
    paid for each contract was 1.25.

17
  • Those are the at-the-money calls. In this case,
    volume is well above open interest, so it looks
    like opening action.
  • Heres the chart of GDXJ

18
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19
  • GDXJ has clearly not had a great year. As you
    can see, the ETF has remained below the 50-day
    moving average since plunging lower in early
    November. This is an interesting trade because it
    seems to go against the fundamentals.

20
  • Granted, the options are right at the money, so
    it wont take a huge move to make this trade a
    winner. However, its an unusual play for this
    ETF, which doesnt generally have a lot of block
    trades in it.

21
  • It could be a bet that the markets will be less
    stable after the Fed rate hike, due to more
    uncertainty over the future of interest rates.
    Uncertainty is a bullish situation for gold.

22
  • Or, maybe the trader just feels the industry is
    undervalued. Well know soon enough since these
    are January options.

23
  • More Options Trading Ideas

24
  • Keep in mind, theres a lot more unusual options
    activity going on than what we discuss here. We
    just try to bring you what we feel are the most
    significant ones and the ones you might actually
    be able to make some money on!

25
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27
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