Shares of gold mining giant Barrick Gold Corporation (GOLD) have traded flat over the past year following a recent surge in shares in recent days. One trader sees the chance for a further move higher in the coming weeks.
That’s based on the March 4th $22.50 calls. With 14 days until expiration, 8,223 contracts traded compared to an open interest of 226, for a 36-fold jump in volume. The buyer of the calls paid $0.53 to make the trade.
Shares of the stock recently went for about $22.25, making this an at-the-money trade, and likely one playing to the current momentum in shares.
Until inflation numbers started topping 40-year highs, gold prices had been coming down after peaking in mid-2020.
Action to take: Gold certainly looks to be breaking higher on a technical basis, and gold stocks tend to perform better than the metal itself during a rally. As a major player with a number of large producing mines, shares can likely continue to rally from here. Investors can also grab a 1.7 percent dividend yield right now.
For traders, the options look interesting, even if they only have two weeks to play out. If shares keep moving higher as they have in recent weeks, it’s possible the position could yield mid-to-high double-digit gains. Just watch out for gold prices breaking lower and look to exit quickly for a longer-term trade if needed.
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 of the companies mentioned in this article.