Andrea Kramer (akramer@sir-inc.com) Front-month options traders targeted Rare Element Resources Ltd. (REE) on Wednesday, after the shares of the mining mogul rallied to a new all-time high of $13.71. Earlier in the week, the security entered double-digit territory for the first time on record, as investors jumped on the stock amid unsubstantiated takeover chatter.
Fueling the equity yesterday, though, was a report in Tuesday's edition of China Daily, which indicated that China would cut export quotas by 30% next year ? a rumor that was ultimately denied by Beijing officials. In addition, the rare earth industry was buoyed by news that U.S. trade officials were investigating a New York Times story suggesting that China had blocked the shipment of manufacturing minerals to the U.S. and Europe. Currently, more than 90% of the world's rare earth minerals are mined and processed in China.
Amid this heap of headlines, REE on Wednesday saw roughly 9,900 calls change hands ? about seven times its expected daily call volume. Meanwhile, more than 8,000 puts crossed the tape ? about 15 times the equity's predicted single-session put activity. Most popular was the November 12.50 strike, which saw around 3,800 calls and 3,250 puts exchanged ? the majority of which traded at the ask price, suggesting they were bought. Plus, both call and put open interest at the front-month strike ballooned overnight, pointing to an abundance of newly opened positions.
By purchasing the November 12.50 calls, the buyers are hoping the shares of REE will surmount the $12.50 level by options expiration. On the flip side, the November 12.50 put buyers are betting the stock will remain south of the $12.50 level in the short term.
At last check, the shares of REE have given back a healthy portion of yesterday's gains, surrendering 8% to flirt with the $11.71 level.
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