Call Volume Pops as Barrick Gold Corporation (ABX) Bounces

Barrick Gold Corporation (USA) (ABX) calls are trading at five times the average intraday rate

by Karee Venema

Published on Jan 15, 2015 at 1:45 PM
Updated on Apr 20, 2015 at 5:32 PM

Barrick Gold Corporation (USA) (NYSE:ABX) is following its sector peers into the green today, as gold soars in the wake of the Swiss National Bank's surprise decision. At last check, the stock was up 8.5% at $11.28 -- despite a downgrade to "underweight" from "equal weight" and price-target cut to $10 from $15 at Barclays -- sending call players flocking to ABX's options pits.

Specifically, calls are crossing the tape at a rate five times the intraday average, and are outpacing puts by a nearly 4-to-1 margin. Most active is the equity's March 10 call, due in large part to a block of 6,662 contracts that, according to Trade-Alert, was bought to open for $846,074 (number of contracts * $1.27 premium paid * 100 shares per contract).

This is the most the speculator stands to lose, should ABX settle in single-digit territory at the close on Friday, March 20, when the options expire. Gains, meanwhile, are theoretically unlimited past the at-expiration breakeven point of $11.27 (strike plus premium paid).

From a wider sentiment perspective, option bears have been targeting the stock, which has shed 42% since hitting its most recent high of $19.36 in mid-August amid pressure from its 40-day moving average. Specifically, Barrick Gold Corporation's (USA) (NYSE:ABX) 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.42 ranks in the 92nd percentile of its annual range.

Daily Chart of ABX Since August 2014 With 40-Day Moving Average

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