Options Report: Playing Gold with Options (ABX, AU, BVN)

Includes: ABX, AU, BVN
by: Philip Davis

Today was a great payoff on all that glittered: Compania de Minas Buenaventura (NYSE:BVN) went straight up all day and the Jun $30s options we bought for $1.30 this morning finished at $2.80 (up 115%). My favorite current gold options plays (as long as gold holds $700) are:

- the AngloGold Ashanti Limited (NYSE:AU) Jun $60s for $1.50
- the BVN Jun $35s for .65.
- Barrick Gold Corporation (NYSE:ABX) Jun $35s would be my buy on a pullback below $1.20.

Other options to watch:

  • Apple Computer (Nasdaq: AAPL) has, for some unknown reason, decided to treat $70.50 as some kind of floor. I still like the $72.50s for $1.05 (down 30%) but only if the Nasdaq is recovering.
  • eBay Inc. (NASDAQ:EBAY) finally made a real move and the Jun $32.50s finished at $1.25 (up 35%) but I sold mine at $1.45 earlier in the day but it still looks good to me.
  • HP (NYSE:HPQ) languished all day, posting less of a recovery than DELL but I'm very happy with the Jun $35s at .60.
  • We kept buying the Intel (NASDAQ:INTC) $20s yesterday down at .25 but the more sensible play was the Jun $20s which came in at .60 this afternoon. I think it's do or die on this one today.
  • Valero Energy Corp. (NYSE:VLO) kept us out of oil yesterday morning but I picked up some puts in the afternoon.
  • McDonalds (NYSE:MCD) had a great day with a strong finish and the Jun $37.50s finished at .35 (up 75%).
  • aQuantive (AQNT) went up 8% today and the Jun $30s ran up to .40 (up 100%) while the $25s only moved up 70%.
  • Alcoa Inc. (NYSE:AA) continues upward with the Oct $37.50s now $2.75 (up 40%).
  • For some reason the Expedia (NASDAQ:EXPE) Jun $22.50s went up 40% to .50 even though the stock fell 1%.
  • The Coca-Cola Company(NYSE:KO) $42.50s tacked on another 20% to $1.30 (up 400%).
  • Motorola, Inc. (MOT) had another solid day and does indeed look pretty good because it is sitting on a mountain of cash. Although this is nice, I prefer to just remember that 1 in 5 phones on the planet is a Motorola phone and that is up 25% from 2004. Portable phones are not like princess phones that you keep all the way through college, they are disposable items unlikely to last 3 years with batteries, chargers and accessories that generate additional profits over the life of the phone. We are in a very early stage of a global cell phone cycle and MOT will be the AT&T of the 21st century without all that tedious investing in wiring. The Jul $22.50s are already $1.40 (up 100%), and it is time to roll into the Jul $25s for .40 which locks in a 50% profit and makes sure you don't miss anything.
  • Morgan Stanley (NYSE:MS) $65s are back at $1.40 (up 50%) but we are cutting it too close to expiration so I am not putting up with another dip.
  • BHP Billiton Limited (NYSE:BHP) really had a nice day and the Jun $50s are now $2.10 (up 105%).