Weekend Trader Alert
February 5, 2023
Open Positions Update
- Close the Chevron (CVX) March 17, 2023, 170-strike call on Monday, February 6. Close the position at a limit price within the range of the current market price when you place the order.
The following is this week's recommendation:
Newmont (NEM)Place a limit order to buy the Newmont (NEM) April 21, 2023 52.50-strike put at a limit price within range of the current market asked price when you place your order. At the close on Friday, February 3, this option was offered at $4.65. NEM closed at $49.85 on Friday, February 3.Do not attempt to enter this position after Monday's close.Please use the following guidelines to manage the position:- Exit the position if the option is at a 100% gain from your entry price.
- If the option has not reached its target profit by 3:00 p.m. Eastern time on Monday, March 6, close the position.
- If there is a change to the above closeout parameters, we will notify you in your regular Sunday evening communication.
Newmont (NEM) stock recently moved below its 200-day moving average, which is guiding the shares lower. The security also failed near the 55-strike peak call level and slipped below its year-to-date anchored volume-weighted average price (AVWAP) at $52.50, with lows from February and June 2021 now acting as resistance. As the stock breaks its recent uptrend, we are recommending a new short position on NEM.
Additional headwinds could come from a shift in the options pit. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), NEM’s 50-day call/put volume ratio of 3.73 ranks higher than 90% of annual readings. Should some of this optimism start to unwind, Newmont stock could tumble even lower.
Weighing in with options could be a good move. This is per the equity’s Schaeffer's Volatility Index (SVI) of 33%, which ranks in the relatively low 14th percentile of readings from the past year. In other words, options traders are pricing in low volatility expectations.
Furthermore, Newmont stock’s Schaeffer's Volatility Scorecard (SVS) sits at an elevated 88 out of 100, meaning it has exceeded option traders' volatility expectations in the last 12 months. Our recommended April 52.50-strike put has a leverage ratio of 6.7, and will double in value on a 13.1% drop in the underlying shares.
Most Recent Recommendations
The information contained herein is intended solely for the individual subscribers, is not intended for institutional investment organizations, and is not legal to be rebroadcast. Please click here for full disclaimer details.
Limitation on Schaeffer's Investment Research (SIR) liability: SIR liability, whether in contract, tort, negligence, or otherwise, shall be limited in the aggregate to direct and actual damages not to exceed the fees received by SIR from Subscriber. SIR will not be liable for consequential, incidental, punitive, special, exemplary or indirect damages resulting directly or indirectly from the use of or reliance upon any material provided by SIR. Without limitation, SIR shall not be responsible or liable for any loss or damages related to, either directly or indirectly, (1) any decline in market value or loss of any investment; (2) a subscriber's inability to use or any delay in accessing SIR website or any other source of material provided by SIR; (3) any absence of material on SIR website; (4) SIR failure to deliver or delay in delivering any material or (5) any kind of error in transmission of material. SIR and Subscriber acknowledge that, without limitation, the above-enumerated conditions cannot be the probable result of any breach of any agreement between SIR and Subscriber.