Barrick Gold Corporation (USA) (ABX) Options Bulls Eye Higher Highs

Barrick Gold Corporation (USA) (NYSE:ABX) hit a new annual high today

by Karee Venema

Published on Apr 29, 2016 at 12:18 PM
Updated on Jun 24, 2020 at 10:16 AM

Gold stocks are getting a boost today, as a retreating U.S. dollar buoys gold futures. Barrick Gold Corporation (USA) (NYSE:ABX), for instance, has surged 6.5% to $18.69 -- after earlier hitting a new annual high of $18.79 -- but options traders think there's even more upside to come.

Taking a quick step back, call options are trading at five times the average intraday pace, and four times the number of put options. What's more, a total of 57,452 calls have traded so far -- in the 99th annual percentile.

Most active is the ABX June 22 call, where 10,962 contracts have changed hands. It seems safe to assume new positions are being purchased here -- a theory echoed by Trade-Alert -- as call buyers bet on a move north of $22 by the close on Friday, June 17, when the back-month options expire.

From a broader sentiment perspective, today's call-skewed session marks a sharp contrast to what's been seen in ABX's options pits in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 1.24 ranks just 4 percentage points from a 52-week peak.

Echoing this is ABX's Schaeffer's put/call open interest ratio (SOIR) of 0.95 -- in the 84th percentile of its annual range. In other words, short-term speculators are more put-skewed than usual toward ABX.

Technically, though, ABX has done little to warrant such skepticism. Including today's surge, the stock has rallied an impressive 153% year-to-date. As such, it's possible that some of the recent put buying could be a result of shareholders protecting paper profits. However, a continued shift in sentiment in the options pits could help propel Barrick Gold Corporation (USA) (NYSE:ABX) to even higher highs.

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