Oh my gosh, gold is up 4.30 right now.
This is from The Street.com this morning:
Options Buzz: Gold Bugs Back in
Fashion as Indices and Stocks Jump
By Dan Colarusso
Senior Writer
9/24/98 2:27 PM ET
The gold bugs were biting again today, shaking off
yesterday's big rally to capitalize on continuing uncertainty
in the market and stake out some new options positions,
traders said.
The options action in the gold sector was scattered over the
big names today, traders said, as volume in Homestake
Mining (HM:NYSE), Newmont Mining (NEM:NYSE),
American Barrick Gold (ABX:NYSE) and Getchell Gold
(GGO:AMEX) surpassed typical levels. A large order also hit
the Philadelphia Stock Exchange Gold and Silver
Index, which has risen almost 42 percent to 69.29
Aug. 31 and yesterday. Today, it added another 5 points by
midday to hit 74.35.
Joe Sunderman, of Schaeffer's Investment Research, said
the options research shop had recently turned bullish on
gold stocks and was holding positions in American Barrick.
"The sector has dramatically turned around, and it's shown
impressive relative strength," he said. "People were
concerned about the size of any potential rate cut and the
impact of inflation, and gold bugs are always ready to put
their money into the options."
The big trade in the Philly's Gold and Silver Index accounted
for more than 1,000 October 70 calls, against open interest
of just 552 contracts. That in-the-money move sent the price
of the contract up 3 ($300) to 6 1/2 ($650).
Newmont and Homestake options saw call trading pick up
today, as well. Newmont shares were up 1 13/16 to 22 7/16
and the October and December 20 calls traded heavily with
the December contract posting volume of 842 in an apparent
covered call write against a purchase of the underlying
shares.
Homestake was up just 5/8 to 11 13/16 at midday but call
buyers thought the company was worth a shot. The October
12 1/2 calls traded 223 contracts, the January 12 1/2 traded
160 contracts and the January 15 calls posted volume of 270
contracts.
At New York brokerage R.F. Lafferty, options head Jay
Shartsis was similarly optimistic on gold stocks' prospects.
"I think they have begun a multi-year bull market for gold,"
Shartsis said. "It's the only real money."
The uncertainty in the equity and currency markets has
contributed to investors' appetites for gold, traders said. The
Chicago Board Options Exchange Volatility Index slid
15% to 31.53 on Wednesday after three weeks of being near
or over 40. The VIX, a major fear indicator, took back about
half of what it lost yesterday, jumping 7.4% to 33.87. The
higher the VIX, which reflects fear via trading in
near-the-money S&P 100 options, the more uncertainty is
present in the market.
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