Barrick Gold Stock Shines After Buffett Takes Stake

GOLD's call volume is surging today

Deputy Editor
Aug 17, 2020 at 10:27 AM
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The shares of mining stock Barrick Gold Corp (NYSE:GOLD) are surging this morning, up 10.2% at $29.73, after the company became the latest investment of Warren Buffett's Berkshire Hathaway (BRK.B), according to Berkshire's 13-F filing from the most recent quarter. The company disclosed a new 20.9 million share investment worth $563.6 million. Wells Fargo (WFC) AND JPMorgan Chase (JPM) had their stakes recently cut by Berkshire, while the company completely exited its investment in Goldman Sachs (GS).

Since dipping to an annual low of $13.01 on March 16, GOLD has had a speedy recovery on the charts, rising in concert with the summer breakout of gold prices. The equity has managed to secure a 48.4% year-to-date lead with a solid layer of support in place from its 40-day moving average.

Options traders are responding in kind to today's news. In just the first hour of trading, 49,000 calls and 11,000 puts have crossed the tape -- seven times the intraday average with volume running in the 100th annual percentile. The weekly 8/21 30-strike call is the most popular, followed by the 31-strike call from the same series.

Meanwhile, GOLD's Schaeffer's put/call open interest ratio (SOIR) sits in the 13th percentile of its annual range, suggesting that short-term options players haven't been more call-biased during the past 12 months. In other words, there's a lot of options-related pessimism that could unwind and push the stock higher.

Barrick Gold stock also sports a Schaeffer’s Volatility Index (SVI) of 44% is in the 22nd percentile of its annual range. This suggests options have been pricing in relatively low volatility expectations right now. 


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