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Today's Change
Delayed Last Update

Newmont Mining jumps 5.11%

Stock Picking, Options Trading for Income - Fri Mar 17, 12:25PM CDT
  • Newmont surged today, making selling covered calls a bit risky and quite attractive.
  • I sold weekly options because the short duration reduces my risk in this market, I think.
  • Gold miners' stocks are being used as hedges against inflation and the uncertainty about deposits in banks.

Newmont Mining Corp. ((NEM) îs up about 4.39% to about $47.76 today as investors moved money to gold miners' stocks and gold ETFs in response to the uncertainty about the safety of money deposited with banks. 

This morning I explained how NEM investors interested in generating options premium income might trade weekly covered calls on the stock. This link to my free newsletter, Stock Picking, Options Trading for Income, will get readers to the comments section where I report in more detail about how I did the following covered calls trade.

I just sold NEM 3.24.23 expiration (7 days) $52 strike (delta .11, OTM 89.73% probability of being called) calls for $0.16 per share. The annualized return if the trade or one like it in ARoR metrics 52 times in the next 52 weeks would be about 17%. If the stock is called, I'll get about a 6% short term capital gain on the trade, too. Then I'll sell cash secured puts. I paid $49 for NEM last month.

All signs are that bank deposits are safe for most people but Sec. of Treasury Janet Yellen made people uneasy when she seemed to dodge questions about who the government is protecting when banks get in trouble. 

The market is showing continued uncertainty about banks' stocks and probably will be uncomfortable with the banks until next Wednesday when the Fed will announce what it is doing about Fed funds rates.

At this point, I'll probably follow the five day rule. It says that when there is big market moving news, wait three to five days to see what the markets really think before doing trades. I'm in Jim Van Meerten's  capital preservation camp . That is what I intend to do. 

More aggressive speculators are trading on the news now, just as I just did. I'll continue to post updates in my newsletter's comments section and on social media. @realDonJohnson. 

On the date of publication, Donald E.L. Johnson had a position in: NEM. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.