Options Check-Up: Barrick Gold, Yamana Gold, Silver Wheaton

Analyzing recent option activity on Barrick Gold Corporation (USA) (ABX), Yamana Gold Inc. (USA) (AUY), and Silver Wheaton Corp. (USA) (SLW)

Jan 7, 2015 at 8:11 AM
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Among the stocks attracting attention from options traders lately are gold concerns Barrick Gold Corporation (USA) (NYSE:ABX) and Yamana Gold Inc. (USA) (NYSE:AUY), as well as mining company Silver Wheaton Corp. (USA) (NYSE:SLW). Below, we'll break down how option buyers are positioning themselves, and how much speculators are willing to pay for their bets on ABX, AUY, and SLW.

  • Shares of ABX have seen better days, with the equity tumbling 38.3% year-over-year. Yesterday, however, the stock performed well, adding 3.4% to settle at $11.27 on the heels of gold's big bounce. Sentiment in Barrick Gold Corporation's (USA) options pits is bearish, with the stock's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.41 sitting just 8 percentage points away from an annual peak. Short-term options for ABX are slightly more expensive than usual, with its Schaeffer's Volatility Index (SVI) of 50% ranking in the 63rd percentile of all similar readings taken in the past year.

  • AUY has suffered a similar fate, dropping nearly 50.3% year-over-year to sit at $4.48, despite gaining 11.4% yesterday in conjunction with the rising price of gold. Nevertheless, sentiment in the stock's options pits is overwhelmingly bullish -- Yamana Gold Inc.'s (USA) 10-day ISE/CBOE/PHLX call/put volume ratio of 43.79 is just 4 percentage points away from an annual high. Options traders aren't the only riders on the bullish bandwagon, with nine out of 13 covering analysts doling out "buy" or better ratings, and only one "sell" to be found.

  • SLW is starting 2015 off with a bang, adding roughly 7.2% since New Year's Day, including a 3.5% increase yesterday. Off the charts, SLW earlier this week said it extended a silver-streaming deal with ABX, providing more than another year of silver production from three of ABX's mines in South America. Sentiment in Silver Wheaton Corp.'s (USA) options pits is trending bearishly, as SLW's 10-day ISE/CBOE/PHLX put/call volume ratio of 0.72 ranks in the 90th percentile of all similar readings taken over the past year. However, the security's Schaeffer's Volatility Scorecard (SVS) of 26 indicates the shares have tended to make undersized moves over the past year, relative to what the options market has priced in.

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