Mining Stock Flashing Bull Signal, Cheap Options

Alamos Gold options are affordably priced at the moment

by Patrick Martin

Published on May 19, 2020 at 3:13 PM

Last week, we checked in on a mining stock flashing a bullish signal. And while gold prices have lost some of their luster this week, there's another mining stock flashing a similar signal that's worth looking in to. Data from Schaeffer's Senior Quantitative Analyst Rocky White suggests Alamos Gold Inc (NYSE:AGI) could see more tailwinds in the months ahead.

Alamos Gold stock scored a three-year high of $8.76 back on April 30. This new peak comes amid historically low implied volatility (IV) -- a combination that has been bullish for the stock in the past. According to White's modeling, there was one other instance in the past five years when the stock was trading within 2% of its 52-week high, while its Schaeffer's Volatility Index (SVI) sat in the 20th annual percentile or lower -- as is the case with AGI's current SVI of 72%, which sits in the 18th percentile of its 12-month range.

The data shows that one month after that signal, the mining stock was up 12%. From its current perch at $8.60, that means another move of similar magnitude would put the stock around $9.63, territory not seen since July 2016. AGI has more than doubled off its March 16 lows of $3.35, with pullbacks contained by its 20-day moving average.

Daily Stock Chart AGI

In the options pits, calls rule the roost amid limited absolute volume. In the last 10 days, 1,356 calls have been bought at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), compared to just 40 puts.

A Schaeffer's exclusive

6 Sectors for Summer

Access your FREE insider report before it's too late!



NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories

Research Exposes Shortcut to Stock Market Wins
A simple way to stop picking losers, and start cashing in like Wall Street's elite.
Google Postpones Android Reveal, "Now is Not the Time to Celebrate"
"Now is not the time to celebrate," Google said in a message on its website
ZNGA Zooms to 8-Year High on Billion-Dollar Deal
ZNGA is planning to buy Peak for $1.8 billion
Huge New Legal Marijuana Market Has Shortage Crisis
250 million Europeans have access to medical marijuana. There's already a shortage....