Unusual Options Activity: Barrick Gold (GOLD)

Traders bet on a gold decline.

After gold hit a 5-year high, one trader is betting on a pullback. On Friday, a bearish bet was made on Barrick Gold (GOLD).

On Friday, over 7,100 contracts of the November $14 put options contracts had been traded, against an open interest of 155, representing a 46-fold surge in volume. This bet, with shares currently at $15.40, would need to see shares decline at least 9 percent between now and November to move in-the-money.

  • Special: Urgent: Three 5G Stocks to Buy ASAP
  • Gold can be a volatile asset, and gold mining stocks tend to fare even worse. Many gold mining companies saw their shares drop 80-90 percent from their peak in 2011, when the metal itself only declined about 40 percent from its peak. So, even if gold prices stay flat from here, mining companies could see their shares decline.

    Action to take: With the contracts trading around $0.58 this is an inexpensive bet on an asset that has plenty of volatility, and could provide investors a way to profit from a declining asset right now.

    A bet like this can serve a good hedge for traders more inclined to be long the metal, if they use trades like this to hedge an existing gold position.

    • 3 Red-Hot 5G Stocks: The Death of Comcast Is Near
      New 5G technology will be 100x faster than your home internet, and Comcast is worried. We've identified 3 stocks that are set to produce returns as high as 3,217%.

      Click here to see for yourself before it's too late. Get in early and own these 5G stocks on the cheap.