Gold Stocks Get Gashed: Barrick Gold Corporation, Agnico Eagle Mines Limited, and Newmont Mining Corporation

Put buying has picked up on Barrick Gold Corporation (USA) (ABX), Agnico Eagle Mines Ltd (USA) (AEM), and Newmont Mining Corp (NEM)

by Alex Eppstein

Published on Mar 6, 2015 at 1:47 PM
Updated on Apr 20, 2015 at 5:32 PM

Gold has tanked 2% this afternoon following this morning's standout jobs report. Accordingly, mining stocks are headed lower, and bearish options betting has picked up on a number of notable names -- including Barrick Gold Corporation (USA) (NYSE:ABX), Agnico Eagle Mines Ltd (USA) (NYSE:AEM), and Newmont Mining Corp (NYSE:NEM).

At last check, ABX was down 6% at $11.46, putting the stock on pace for its lowest finish since mid-January. Meanwhile, puts are changing hands at double the usual intraday clip, and traders may be buying new positions at the April 11 put -- where 3,090 contracts are on the tape, more than any other ABX strike. In so doing, the speculators expect ABX to breach $11 by the close on Friday, April 17, when the back-month options expire.

Today's dip isn't catching the brokerage bunch by surprise. Sixteen out of 18 covering analysts rate Barrick Gold Corporation (NYSE:ABX) a "hold" or worse, suggesting high levels of skepticism.

Likewise, AEM was last seen 8.2% lower at $28.75, with the shares now testing their 80-day moving average. Option bears have responded, buying to open the March 29 put -- in the hopes of an extended retreat south of $29 over the next two weeks, which represents the contract's lifespan.

Puts have been popular for a while on Agnico Eagle Mines Ltd (NYSE:AEM). The stock's 10-day put/call volume ratio across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) checks in at 0.49 -- in the bearishly skewed 94th percentile of its annual range.

Finally, NEM is staring at a 7.8% intraday deficit, hovering near $23.33 -- though the shares remain more than 23% higher on a year-to-date basis -- to test their 200-day trendline. As such, puts are trading at quadruple the expected pace for this point in the day. According to Trade-Alert, one speculator bought to open a block of 6,500 May 23 puts, rolling the dice on additional downside through May options expiration.

This appetite for long puts has been common in recent weeks. Newmont Mining Corp's (NYSE:NEM) 10-day ISE/CBOE/PHLX put/call volume ratio of 0.90 outranks more than three-quarters of all other readings from the past year. In a similar vein, the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.82 sits just 2 percentage points from a 12-month peak.


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