Identifying a disparity between gold and gold miners yields a +90% profit in one month by buying naked call options
What? The price of Gold has risen 13% YTD in 2024, but strangely, one gold mining stock, Newmont, had been selling off and was down -25% at the start of the year.
Why? Negative sentiment due to the company missing earnings estimates pushed the stock way beyond a reasonable landing.
Setup: LevelFields analysts noticed the price disconnect with rising gold prices and sent the alert below to Level 2 users on Feb 29, 2024:
Newmont appears to be on a solid recovery path, underpinned by strategic growth initiatives, operational efficiencies, and a strong focus on shareholder value, making it an attractive investment option despite recent earnings misses. NEM is down -28.68% in the last year, while gold is up over 11%. In addition to this divergence, Newmont is likely to continue its reversal from its new low and rebound towards the $39 range.
Trade Option: Buy Long or $30 Call 9/20/24 (Delta of .66/ Price $4.00 a contract)
Result: NEM hit 39/share and the stock options contract rose 90% in 30 days, as shown in the graph below.
Takeaway: The market usually prices things correctly, eventually, but very often large price discrepancies exist for months between what a company is worth and what price it trades at. These can be used for great swing trades if you know where to look or know someone who does.
LevelFields AI provides investors a way to monitor critical market events and profit from them, without opinion. Many options traders use LevelFields AI to find trade ideas and pinpoint entry and exit points as well as strategies with their stock options trades.
Our analysts use our own system along with other data not on the system to flag high profit, high probability trade ideas. We send those to our premium members that lack the time or expertise to put together the trade setups themselves. To learn more, visit our pricing page.
