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Option Brief: Barrick Gold Corporation (USA) (NYSE:ABX) is standing 0.6% above breakeven today at $15.63, despite a price-target cut to $17 from $18.50 at UBS this morning. Meanwhile, ABX calls have been flying off the shelves, as 52,000 of these contracts -- or three times the average intraday norm -- have crossed the tape thus far.
Much of today's call activity can be traced to the weekly 12/6 16 strike, where around 19,100 contracts have been exchanged -- 14,000 of which traded at the hands of one trader, according to Trade Alert. Overall, 92% of the contracts went off at the ask price, implied volatility at this strike has spiked 13 percentage points, and volume exceeds current open interest -- all of which suggests that at least some of this activity has been of the buy-to-open variety.
Although ABX has a history of performing poorly on the charts -- the stock is down 53.7% year-over-year -- today's bullish bettors are rooting for the equity to switch gears, and finish north of the $16 level by this Friday's close, when the weekly options expire. Barrick Gold Corporation (USA) (NYSE:ABX) was last seen trading atop this mark just yesterday. Still, should the stock continue on its longer-term downward trajectory, the most today's call buyers stand to lose is the initial premium paid. For the aforementioned large-scale trader, however, that's nearly $250,000, given the volume-weighted average price of 17.5 cents per call, times 14,000, times the 100 shares each contract represents.