By Andrew Wilkinson at Interactive Brokers
A four-year low for the spot price of gold has had a devastating impact on Yamana Gold (Ticker: AUY), with shares in the name down at the lowest price in six years. Some option traders were especially keen to sell premium and appear to see few signs of a lasting rebound within the next five months. The price of gold suffered again Wednesday as the dollar strengthened and stock prices advanced. The post price of gold fell to $1145 adding further pain to share prices of gold miners. Shares in Yamana Gold tumbled to $3.62 and the lowest price since 2008 as call option sellers used the April expiration contract to write premium at the $5.00 strike. That strike is now 38% above the price of the stock. Premium writers took in around 16-cents per contract on almost 10,000 call options. Ahead of the session, less than half that number of call options were held among investors. The spate of call selling on the name contributed to around half the overall volume tally of 21,600 contracts, which is already above the 10-day average reading of 16,100 lots associated with the stock. Option implied volatility is up only marginally on Yamana Gold at 60.9% with the market value of the company halving in the past six-weeks. The most widely-held option across all strikes is the April 2015 6.0 strike put option where open interest remains at 44,000 contracts.
Chart – Open interest highest at 6.0 strike puts expiring in April
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