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« Gold Prices Update 30 April 2010 | Main | High River Gold Update 29 April 2010 »

Agnico-Eagle Mines Limited Call Options Update 29 April 2010

AEM Chart 29 April 2010.jpg

Just a quick note to update the team on the purchase of the MAY 2010 series Call Options at a strike price of $60.00 on Agnico-Eagle Mines Limited, for which we paid a price of $4.64 per contract. These contracts closed today at $4.89, for a rise of 4.82%.

We made the purchase on the 11th February 2010 when Agnico-Eagle was trading at around $58.00 area. The stock has rallied a little and then fell back and rallied again to close at $63.62 today so these contracts are now ‘in the money’

As we can see from the above chart a 4% jump in the stock price today helped to place are Call Options in positive territory, if gold prices can show a little more strength over the coming two weeks or so, then Agnico should move higher in a convincing fashion with the resulting boost for the Call Options.

The following is snippet from Market Intellisearch

NEW YORK (Market Intellisearch) -- AEM options saw interesting call activity today. A total of 3,997 put and 15,668 call contracts were traded raising a low Put/Call volume alert. Today's traded Put/Call ratio is 0.26. There were 3.92 calls traded for each put contract.

Unusual volume provides reliable clues that the stock is expected to make a move. Investors can use the Put/Call ratio statistics to measure trader sentiment. A high Put/Call ratio suggests that the overall investment sentiment is bearish and that investors expect the underlying stock to decrease in value. Conversely, a low Put/Call ratio implies that the overall investor sentiment is bullish based on the large amount of call options.

These are interesting statistics but do not bet the ranch on any one indicator just add it to the pot of things to think about when evaluating your next move. For instance, it could be argued that the investors who sold the Call Options are as convinced that Agnico is going down as the purchasers are that it is going up, just a thought.

Over on the silver prices site we have two options positions in Silver Wheaton Corporation that are doing very well at the moment and closed today showing paper profits of 88.25% and 81.52% respectively, click here to take a peek.

As a suggestion for those who do want leverage to the precious metals bull, the gold and silver funds together with the careful application of options trades could be a possible solution for you. This way we are exposed to any movement in gold prices which in turn is magnified by the effect of the option. Do remember that loses are also magnified in the same way so its not a strategy for the faint hearted. On the other hand the quality stocks are not performing as anticipated and a non-producing junior stock is a shot in the dark, however, its your money and its your call.

Got a comment then please add it to this article, all opinions are welcome and appreciated.

If you would like to get a bit more bang out of your buck, then check out our Options Trading Service please click here.

For the analysis of a recent options trade that we have just closed please click this link.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

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