Shares of silver mining company Pan American Silver Corp (PAAS) have shed one-third of their value over the past year. One trader sees the stock moving higher in the next few weeks.
That’s based on the February $20 calls. With 51 days until expiration, 5,297 contracts traded compared to a prior open interest of 135, for a 39-fold increase in volume on the trade. The buyer of the calls paid $0.38 to bet on a rally.
The stock recently traded for just under $17, so shares would need to rise at least $3, or about 18 percent, for the option to move in-the-money. The stock is closer to its 52-week low of $13.40 than its high of $30.56.
Silver prices are up about 5 percent over the past year, however, much of that change has occurred thanks to a recent rally in the metal. Pan American shares are likely to move based on how the price of silver changes.
Action to take: The current rally in silver has been stronger than the one for gold. So it’s likely that it could continue to move higher on a percentage basis in the months ahead. Traders can likely fare well with the metal going into 2023.
For options traders, the February calls are aggressive, but could deliver triple-digit returns.
Pan American shares would need to continue their rally of the past few months at a strong rate. Even if that doesn’t happen, traders could likely leverage this move into a mid-double-digit profit in just a few trading days.
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.