Payrolls Flop Has Gold Stocks Sizzling

The SPDR Gold Trust ETF (NYSEARCA:GLD), Direxion Daily Gold Miners Bull 3X Shares (NYSEARCA:NUGT), and Daily Junior Gold Miners Index Bull 3X Shares (NYSEARCA:JNUG) are on fire

by Alex Eppstein

Published on Oct 2, 2015 at 11:09 AM

Gold is on the rise after the payrolls report showed the economy added fewer jobs last month than expected -- dampening expectations that the Fed will raise interest rates soon. Low rates, after all, are a boon for the malleable metal, since they reduce the opportunity cost of holding it. Among the gold-related equities heading higher this morning are the SPDR Gold Trust ETF (NYSEARCA:GLD), the Direxion Daily Gold Miners Bull 3X Shares (NYSEARCA:NUGT), and the Daily Junior Gold Miners Index Bull 3X Shares (NYSEARCA:JNUG).

GLD was last seen up 2.3% at $109.21 -- paring its year-to-date loss to 3.9%, and on track to close atop its 10-day moving average for the first time since last Friday. Option bulls have been piling on the exchange-traded fund (ETF) in recent months, rolling the dice on more upside. GLD's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio sits at an annual high of 2.13, with long calls more than doubling puts.

Even more impressive is NUGT, soaring 15.2% to trade at $31.16 -- and fresh off an annual peak of $31.80. Option bears may be reeling on the upward gap. The stock's 10-day ISE/CBOE/PHLX put/call volume ratio of 0.31 outranks 81% of comparable readings from the past year. Echoing this, NUGT's Schaeffer's put/call open interest ratio (SOIR) of 1.00 is located above more than three-quarters of comparable readings, looking back 12 months.

Finally, JNUG has tacked on 14% to hover near $40.20, bringing its year-to-date advance to 65% -- quite the turnaround from where the equity was this time last month. Option bulls aren't expecting anything less, buying to open more than 23 calls for every put in the last two weeks. The resultant ISE/CBOE/PHLX call/put volume ratio of 23.33 represents an annual high, meaning traders are buying to open JNUG calls over puts at an extreme rate.

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