The article talks about some people who have made bets on the price of a company called Newmont going down. They bought something called options, which are contracts that give them the right to buy or sell Newmont's stock at a certain price in the future. The article also says that most traders think Newmont's stock will be between $30 and $40 in the next few months. Read from source...
1. The title is misleading and sensationalized, as it implies that there was a sudden surge in options activity for Newmont, while the text only mentions unusual trades over a span of three months. A more accurate title would be "Spotlight on Newmont: Analyzing Unusual Options Trades Over Three Months".
2. The article lacks proper context and background information about Newmont and its industry, which makes it difficult for readers to understand the significance of the options trades. For example, a brief introduction of Newmont as a gold mining company and a mention of its performance in the past year would help readers gauge the relevance of the options data.
3. The article relies heavily on percentages and ratios to describe the market sentiment, without providing any concrete evidence or sources for these claims. For example, it states that 20% of traders were bullish and 80% bearish, but does not mention how this was determined or what data was used to support this assertion.
4. The article fails to explain the difference between puts and calls, and how they relate to the price target range mentioned later in the text. This is a basic concept for options traders, but the article assumes that readers already know it and does not provide any explanation or clarification.
5. The article introduces several technical terms and concepts, such as volume, open interest, and implied volatility, without defining them or providing any context for their relevance to Newmont's options trades. This makes the article inaccessible and confusing for readers who are not familiar with these terms.
6. The article promotes Benzinga Pro as a source of real-time alerts for Newmont options trades, but does not disclose any potential conflicts of interest or financial incentives that may influence their coverage of the company. This creates a conflict of interest and undermines the credibility of the article.
7. The article ends with an advertisement for Benzinga's services, which is irrelevant to the content of the article and detracts from its informational value.
1. Buy the December 2024 $35 call option at a price of $1.70 or lower. The potential return on this trade is around 198%. The risk is limited to the premium paid for the option, which is $1.70 per contract. This trade implies a breakeven price of $36.70 for Newmont by December 2024 options expiration.
2. Sell the June 2024 $40 call option at a price of $1.50 or higher. The potential return on this trade is around 19%. The risk is limited to the premium received for the option, which is $1.50 per contract. This trade implies a breakeven price of $38.50 for Newmont by June 2024 options expiration.
3. Buy the June 2024 $40 put option at a price of $1.75 or lower. The potential return on this trade is around 64%. The risk is limited to the premium paid for the option, which is $1.75 per contract. This trade implies a breakeven price of $38.25 for Newmont by June 2024 options expiration.
Explanation:
The first trade is a bullish bet on Newmont's stock price, as it expects the share price to rise above $35 by December 2024. The second trade is a bearish bet on Newmont's stock price, as it expects the share price to fall below $40 by June 2024. The third trade is a neutral or protective bet on Newmont's stock price, as it hedges against a potential decline in the share price by June 2024. By selling the call option, you reduce your exposure to downside risk and increase your potential upside profit.