Trader LEAPs into 2012 Hecla Mining Calls As Puts, Short Interest Rise! Jefferies & Co. Initiates $HL With Buy Rating, $7 Target

You remember all that action last week in Hecla Mining's January 2012 $2.5 Calls on the International Securities Exchange?  I took snapshots the other day of the activity.  On the ISE, 21,451 moved at 3.2.  HLs ISEE ratio was the highest that day on the widget. Ever since the March 2009 low, Hecla's Put/Call open interest ratio has been rising even though puts open are less than half the call count.  The ratio is at 0.43 up from 0.11 in April 2009.  Short interest has been rising as well. It's the highest its been since 2008 with 40.23 million shares short as of 6/01/2010.  The Schaeffers Volatility Index is also at two year lows.  So what happens next?

Does Hecla ride a silver break out, HL shorts get squeezed and calls-to-puts rally?  OR, does Hecla breakdown, puts-to-calls spike and bad HL volatility spike?  Place your bets.  This Schaeffer's article gives potential reasons for the 2012 trade.  Hecla is near a big time ceiling resistance level and so is Silver (see SLV chart).  Hecla's call volume in 2009 forecasted higher levels when it was on the brink of bankruptcy.  Hedge longs here.  HL ISE Implied Volatility lost 11% since the trade (65.80 to 54.50 today).   Hecla's stock is in a symmetrical triangle (near the break point) and is being squeezed between the 50 (above) and 200 (below) day moving average.  HL hit a high of $7.50 in December 2009, it is currently trading at $5.53.


*Jefferies Initiated Hecla Mining with a BUY rating and $7 Target on June 11, 2010 (newratings)

Hecla Adjourns Portion of Its Annual Meeting until June 18, 2010 - (Hecla Mining News)

Hecla Mining Co. (Courtesy of

21,451 $HL Jan 2.5 Calls at $3.2 (ISE)

See the most recent posts on Hecla Mining (HL).