by David Russell
Stock and options trading exploded in Ivanhoe Mines (IVN) Tuesday after the Mongolian Parliament changed a tax law that will let the company develop a copper and gold complex in the country profitably.
IVN ripped higher by more than 20 percent to $10.53 in midday trading and is up almost 300 percent this year. The company said it will sign an investment agreement with the government to develop the Oyu Tolgoi property in South Gobi after lawmakers voted overwhelmingly Tuesday to repeal a windfall-profits tax.
Options action in IVN, which has been strongly bullish for weeks, reflected mixed sentiment. In the largest transaction, 17,000 December 10 calls were sold for $2.05. The trade came against existing open interest and probably results from an investor taking profits on an existing position in the calls.
Others sold the September 10 puts for $0.70 to $1.25. Volume was also below open interest, which suggests some of the selling resulted from investors removing protective positions on holdings in the stock.
Traders seeking bullish exposure to IVN going forward purchased the December 15 calls, which changed hands 1,377 times for $0.55 to $0.65 against open interest of 926 contracts.
Overall options activity in the name was seven times average, and stock trading was four times greater than normal. Rio Tinto (RTP), IVN's partner on the mine, rose 0.36 percent to $163.09.
(Chart courtesy of tradeMONSTER)