Call Volume Pops as Barrick Gold Corporation (ABX) Bounces

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

Jan 15, 2015 at 1:45 PM
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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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