Hi browser,
ABX approached resistance and backed off. The recent drop and the recent high were both on high volume, so both were valid.
Gold really doesn't belong on the hot list in a deflationary environment, and it's been range-bound for a while now.
At about $21 for the stock and 4 7/8 for the 17.50 call, ABXAW has $3.50 intrinsic and $1.375 time value. Not too bad, not great:
stock - strike = intrinsic
21 - 17.50 = 3.50
ask - intrinsic = time
4.875 - 3.50 = 1.375
But it's in the money, which is more than you can say for the put. Being out of the money, the ABX Jan99 $25 put is $3 out of the money and boasts a premium of $5. Theoretically, ABX can go down $8 and ABXME doesn't have to move.
Note that this is highly unlikely, as always in these calculations, I am pointing out what would happen to a put/call price if delta went to zero.
When you look at things in the their extremes, it helps build a picture around what is likely to happen.
I would short the stock, not buy the put.
Caroline |
