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Actionable news in ABX: BARRICK GOLD Corp,

Options Traders Make Multi-Million Dollar Bets Against Gold Miners

Large options traders decided today was a good day to place some outsized bets against the gold mining sector via the GDX exchange-traded fund. The September and October $23 strike put options were particularly active, seeing more than US$5 million in volume in those two strikes/expiries alone:

GDX October Call/Put Options ($22-$24 strikes)

October $22 and $23 strike GDX puts were particularly active with the $23 strike trading nearly 3x open interest. Three opening trades for more than $500,000 in options premium each accounted for more than 1/2 of the day's volume in the October $23 puts.

Why the heavily bearish options activity in GDX today?

In one sense it doesn't make much sense because the gold miners are entering the most bullish stretch of the year historically (in the last 20 years the HUI Gold Bugs Index has averaged a 7.4% gain during August/September). However, on the other hand these put purchases are well placed at key resistance levels ($22 and $23) and offer the put buyers relatively cheap insurance (if they are hedges against long stock positions) or a cheap speculation (cheap implied volatility) on a technical breakdown in the next couple of...


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