Barrick Gold Stock Support in Place as Commodity Surges

A bevy of ascending moving averages are acting as support

by Research Dept.

Published on Apr 8, 2020 at 2:09 PM

As gold prices continue to skyrocket, mining stock Barrick Gold Corp (NYSE:GOLD) has, to the same tune, broken out above a short-term trendline. GOLD now has a bevy of ascending moving averages in place acting as support, even as the shares' weekly moving averages – which had been in a nine-year downtrend – have turned upward. With these newfound cushions, now may be the time to strike.

WKEND Chart GOLD

 

In the options pits, puts are running the show. GOLD sports a 10-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) that sits higher than all but 3% of readings from the past year, suggesting a long puts have rarely been more popular during the last 12 months.

Echoing this, the security's Schaeffer's put/call open interest ratio (SOIR) of 1.12 sits in the 100th percentile of its annual range, suggesting that short-term options players haven't been more put-heavy during the past 12 months. In other words, there's a lot of options-related pessimism that could unwind and push the stock higher.

Despite the high implied volatility environment, Barrick Gold's Schaeffer’s Volatility Index (SVI) of 63% is in the 32nd percentile of its annual range, suggesting options have been pricing in relatively low volatility expectations right now. Plus, GOLD's Schaeffer's Volatility Scorecard (SVS) sits high at 79 (out of 100), showing that the stock has tended to exceed option traders' volatility expectations during the past year, a good thing for option buyers..

Subscribers to Schaeffer's Weekend Trader options recommendation service received this GOLD commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.


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