Gold exploration and production company
Newmont Mining (NEM) is up just 2% over the past year, far lagging gold’s soaring returns of over 27%. One trader sees shares trending higher in the coming days.
That’s based on the December 20 $47 calls. With 17 days until expiration, 3,013 contracts traded compared to a prior open interest of 146, for a 21-fold rise in volume on the trade. The buyer of the calls paid $0.11 to make the bullish bet.
Newmont shares recently traded for about $42, meaning the stock would need to rally by $5, or about 12%, in just under 3 weeks. That strike price is still well under the Newmont’s 52-week high of $58.72.
Revenues have jumped 85% and earnings are up a massive 484% over the past year as gold prices have soared. However, Newmont had had to contend with rising costs, which has hit shares in the short-term.
Action to take: Newmont shares have underperformed gold, but could be on track to trend higher into 2025. Investors may like shares at current prices, and can also get paid a 2.4% dividend. The stock appears to be shaking off its recent losses and looks ready catch up with gold.
For traders, a call option trade plays a rally in Newmont and gold well. The December 20 $47 calls are aggressive and unlikely to move in-the-money. But they’re also inexpensive enough that they could see high double-digit returns before expiration in the coming days.
Less aggressive traders may want to go further out, or use a lower strike price.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.
