Miners23 Jun 2020 18:48
They're not rushing into KEFI!!
Options traders are rushing into gold miners as coronavirus cases surge
PUBLISHED TUE, JUN 23 202012:35 PM EDT
Tyler Bailey
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VIDEO01:34
Gold prices rise—What’s next for the precious metal?
The Nasdaq hit another record high Tuesday as markets continue their climb back to all-time high territory, but that isn’t stopping options traders from getting bullish on gold as they look for a potential safe haven as coronavirus cases surge.
Gold bullion touched its highest levels in more than a month on Monday, while the GDX ETF that tracks the gold mining space surged up 4%, boosted by a wave of bullish options activity.
“Calls have outpaced puts by between two and three times to one today, and what really jumped out to me was the GDX June 26 weekly [expiration] 35-calls that traded around 10,000 times for 64 cents-65 cents [per contract],” Bonawyn Eison, managing director at XP Investments, said Monday on “Fast Money.”
Those 35-calls break even around $35.64, or about 2% from where GDX closed Monday’s session. According to Eison, traders purchasing those contracts are likely looking for an even larger breakout in the space, while also reallocating part of their portfolio to a more risk-off area of the market.
“The person that is putting this trade on is essentially managing that portfolio, moving from speculative plays to a bit more high-quality plays,” said Eison, “While still letting that money continue to work.”
The GDX ETF was about 1.7% higher Tuesday.