Investors in Barrick Gold Corporation (GOLD – Free Report) should keep a close eye on the stocks based on the moves in the options market lately. That’s because the December 20, 2024 $3 Call had some of the highest implied volatility of any stock option today.
What is implied volatility?
Implied volatility shows how much movement the market expects in the future. Options with a high degree of implied volatility suggest that investors in the underlying stock are expecting a big move in one direction or the other. It could also mean that an event is happening soon that could cause a big rally or a huge sell-off. However, implied volatility is only one piece of the puzzle when putting together an options trading strategy.
What do the analysts think?
Clearly, options traders are pricing in a big move for Barrick Gold stock, but what’s the fundamental picture for the company? Currently, Barrick Gold is a Zacks Rank #2 (Buy) in the Mining Gold industry that is in the Top 15% of our Zacks Industry Rank. Over the past thirty days, two analysts have increased their earnings estimates for the current quarter, while one analyst has revised their estimate downwards. The net effect has taken our Zacks Consensus Estimate for the current quarter from 40 cents per share to 44 cents in that period.
Given the way analysts currently feel about Barrick Gold, this huge implied volatility could mean a trade is developing. Often options traders look for options with a high degree of implied volatility to sell premium. This is a strategy that many seasoned traders use because it catches decay. At expiration, the hope for these traders is that the underlying stock does not move as much as originally expected.
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