Gold prices have been trending higher over the past few months, as have many gold stocks like Alamos Gold (AGI). Shares are up 97% over the past 12 months, and one trader sees further upside over the coming months.
That’s based on the November $30 calls. With 246 days until expiration, 4,861 contracts traded compared to a prior open interest of 101, for a 48-fold rise in volume on the trade. The buyer of the calls paid $1.95 to make the bullish bet.
Alamos shares recently traded for about $26, so shares would need to rally by about $4, or about 15%, for the options to move in-the-money.
Operationally, Alamos has seen revenues rise by 48% and earnings growth rise by 86% as gold has risen by over 30% since the start of 2024, recently topping $3,000 per ounce for the first time. Typically, gold mining stocks will outperform gold during a strong bull market.
Action to take: With strong momentum behind it and more upside for gold prices likely ahead, Alamos can likely continue higher, potentially seeing more double-digit returns this year. Alamos also pays a small 0.4% dividend at today’s prices.
For traders, the November $30 calls are well positioned for further upside. If gold sees a massive jump in the coming months, the Alamos options could see triple-digit returns.
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.
