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Options bulls should consider this gold stock

Commentaries & Views

NEM has added more than 19% over the past six months

Gold stock Newmont Corporation (NYSE:NEM) is bouncing off support at its 200- and 320-day moving average convergence. The stock has also found a floor right above the $62-$63 area, which marks both its year-to-date breakeven level and round $50 billion market cap. Plus, the stock is up 7.8% year-to-date and 19.2% over the past six months.

Of the 23 analysts in coverage, 16 carry a "hold" rating, with seven at a "buy" or better, leaving plenty of opportunity for an optimistic shift. And though short interest has increased roughly 40% since December, the shares have still rallied, pointing to underlying technical strength.

Many June 70 and 75 calls expire next week, and some recent weakness may have been caused by an unwinding of long positions associated with these calls. Furthermore, the security's Schaeffer's Volatility Scorecard (SVS) sits at a relatively high 80 out of 100, meaning NEM has exceeded options traders' volatility expectations during the past year.

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