Direxion Daily Gold Miners Bulls 3X Shares (NUGT) Booms on Jobs Report

The Direxion Daily Gold Miners Bulls 3X Shares (NUGT) is flying high on a lackluster nonfarm payrolls report

Alex Eppstein
May 6, 2016 at 11:49 AM
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The Direxion Daily Gold Miners Bulls 3X Shares (NUGT) is following gold sharply higher today -- as the precious metal surges on the Labor Department's downbeat jobs report. At last check, gold for June delivery was seen 1.8% higher at $1,294.70 an ounce -- and approaching the round $1,300 level -- while NUGT has soared 15.3% at $111.03. This may not be what options traders expected when they placed bearish bets on the exchange-traded fund (ETF).

Looking at data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), options players have bought to open 0.93 puts for each call over the last 10 weeks. While still slanted toward calls on an absolute basis, the corresponding put/call volume ratio ranks in the 94th percentile of its annual range -- suggesting traders have been placing bearish bets on NUGT at an accelerated rate recently.

On top of that, the ETF's Schaeffer's put/call open interest ratio (SOIR) checks in at 0.85. The SOIR outstrips 79% of readings from the past year, indicating speculators are more put-heavy toward NUGT than usual, when it comes to options in the front three-months' series.

That said, another strategy could be afoot -- especially since NUGT has been killing it in 2016. Year-to-date, the gold ETF has more than quadrupled in value. As such, recent put buyers may be investors seeking a hedge against an unexpected downturn in the Direxion Daily Gold Miners Bulls 3X Shares (NUGT).

While gold's ascent hasn't been quite as dramatic, the malleable metal has still put in a stellar performance this year. Specifically, gold has advanced about 22% in 2016, and earlier this week touched an annual high of $1,304.40 -- just after Schaeffer's Senior VP of Research Todd Salamone pondered whether it might be time to increase exposure to gold.

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