Molycorp (MCP) is up $2.21 to $22.87 on surging volume of more than 6 million shares amid strength in the rare earth names after China announced plans to crack down on illegal mining and tighten production levels. Options volume on MCP through Noon ET is 27,000 calls and 6,360 puts. Weekly 23 calls, which are now 13 cents out-of-the-money and expiring in just a few days, are the most actives. 3,500 traded against just 28 contracts in open interest. Weekly 21, Weekly 22, July 23, July 24, and July 25 calls are busy and seeing opening activity as well. 30-day at-the-money implied volatility in MCP jumped 18 percent to 59, as speculative call buyers are playing the stock for a rebound after the 64 percent plunge suffered since July 2011. Short interest is likely involved in the call buying as well. At the end of May, short (as percent of float) ratio was more than 38 percent.
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Frederic Ruffy is a well-known trader, writer, and strategist who has spent years educating investors and creating intelligent, insightful, unbiased market observations that are frequently cited by the Wall Street Journal and other financial publications. As senior analyst, Fred provides frequent and regular notes and daily updates for activity of interest.