As was pointed out in yesterday's "Groups on the Move: Rare Earths Up; Uranium, LED's Down (AVL; REE; MCD; URA)" rare earths were where the action was. Tickerspy's index, up 7.36% at post time closed up 15.5%, led by REE's 24% move.
From the Wall Street Journal:
Options traders climbed back aboard the rare-earths bandwagon, dismissing worries that Japan's earthquake would hamper demand for the sought-after minerals and thus the stocks of companies in the sector.
Options traders staged a rush of bullish activity targeting Molycorp and Rare Element Resources after Molycorp's chief executive told conference-goers in Toronto that prices are "significantly higher than we anticipated" and that Japan's quake didn't impact sales in that country, according to a Reuters report. Volume in bullish call options to buy Molycorp's shares hit a record, and volume in Rare Element was the highest in two months.
More broadly, investors took another breather from the rough trading that began with Japan's nuclear crisis. The Chicago Board Options Exchange Volatility Index, or VIX, fell below 20 for the first time since the crisis gripped markets. It finished at 20.21, down 0.40, or 1.9%.
Rare-earth minerals are used in high-tech manufacturing of such products as batteries, glass and electronics. They rose from industrial obscurity several months ago amid reports that China, by far the world's top producer, could squeeze the global supply.
Investor sentiment has been mixed lately and worsened with Japan's earthquake and tsunami, with many investors worrying about manufacturing disruptions. Japan is the world's top importer of the minerals, which have such names as lanthanum and didymium.
Those concerns took a back seat on Tuesday as traders picked up large batches of call options to buy Molycorp's stock at such prices as $50, $55 and $60 by the middle of next month. At 4 p.m. in New York Stock Exchange trading, Molycorp's shares were up $7.89, or 18%, at $52.57.
In Rare Element Resources, the focus was on calls to buy the company's shares at $12.50 by the middle of next month. Rare Element's shares rose $2.50, or 24%, to $12.88....MORE