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Bearish options active on Molycorp Inc (MCP) as shares nosedive

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Molycorp Inc (NYSE:MCP) – Shares in rare earth metals mining company, Molycorp Inc (NYSE:MCP), are reeling Thursday morning after the Greenwood Village, Colorado-based company missed its 2012 production target and lowered its 2013 revenue and cash estimates. The stock is currently down 24% on the day to stand at $8.20 as of 11:00 a.m. ET. Analysts at JPMorgan cut their price target on the stock to $5.00 from $8.00 today. Options traders positioning for shares to weaken further by the end of this week initiated bearish plays in weekly put contracts. Put volume is on the rise at the Jan 11 ’13 $9.0, $8.5 and $8.0 striking prices this morning. Traders appear to have purchased around 1,100 in-the-money puts at the $9.0 strike, and another 2,350 lots at the $8.5 strike in the early going. The $8.0 strike puts have traded upwards of 2,200 times thus far today versus zero previously opened positions, with the bulk of the contracts purchased for an average premium of $0.13 apiece. Traders long the Jan. 11 ’13 $8.0 strike puts stand ready to profit at expiration this week should Molycorp’s shares decline another 4% from the current price of $8.20 to breach the average breakeven point at $7.87. Molycorp Inc (NYSE:MCP) shares, down more than 70% since January 2012, last traded below $7.87 on November 23rd.

Bearish options active on Molycorp Inc (MCP) as shares nosediveIAC/InterActiveCorp (NASDAQ:IACI) – Options activity on media and Internet company, IAC/InterActiveCorp (NASDAQ:IACI), this morning indicates one trader is preparing for shares in the name to potentially decline in the near term, perhaps following the company’s fourth-quarter earnings report in February. Shares in the operator of online dating websites, match.com and okcupid, are down more than 3% today at $43.99 as of 11:15 a.m. in New York. The single-largest transaction in IAC/InterActiveCorp (NASDAQ:IACI) options this morning was the purchase of 1,500-lot Feb. $40/$45 put spread for a net premium of $1.55 each. The bearish spread makes money if shares in IAC/InterActiveCorp (NASDAQ:IACI) slip 1.2% from the current level to trade below the breakeven price of $43.45. Maximum potential profits of $3.45 are available at expiration next month in the event that shares in the media company drop 9% to a new 52-week low of $40.00.

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