My first time with buying Call options

I have been away from my blog for a few days, but that does not mean that I have not been working on my investments.  Far from it.  I decided to branch out a few days ago and try something new......Buying Calls.

A week or so ago, I read that China produces 95% of the Rare Earth Metals.  In the article it stated that China consumes a lot of these materials, and in the years to come will be consuming all that it produces.  Around the time that I read this China had cut off Japan from receiving these metals.  The article also stated that the U.S. and other countries use these metals for military purposes, and in a lot of the electronics that we use everyday.  I did some more research into this situation, and feel that Rare Earth Metals might be a good investment opportunity for the future.

So, with that in mind I have been following a company that just recently went public.  MolyCorp inc. (MCP).  They are a mining company based in the United States, that digs for Rare Earth Oxides. The one thing that made me hesitate about investing in this company is that it does not have a dividend.  If you remember, I said I like to invest in dividend stocks so I can get multiple streams of income.

Below is their chart.

Figure 1: MCP charts

I drew two lines on the candlestick chart, showing that the stock is trading upward within two resistance levels.  I decided to try my hand at trading Call options on 10/20/2010.  I bought two MCP December 2010 calls at $3.70, for a total of $754.97.  Now I must sit and wait for the price of the stock to go up. Since buying the options, the price has gone down.  I am not off to a good start for November.

I only used a portion of my $5000 with this investment, so I would like to also sell one or two Puts for November as well.  I just need to pick the stock.