TradingTips.com

TradingTips.com

Unusual Options Activity: AngloGold Ashanti (AU)

Posted: 05 Jul 2019 03:00 AM PDT

Big bet on gold mining company shares moving higher this year.

Shares of mining companies can be pretty volatile. If gold prices stop moving higher, the share price on these companies can drop quickly.

Yet at least one trader is betting that mining giant AngloGold Ashanti (AU) will trade at least as high as it's been if not higher by the end of January 2020.

On July 3rd, there was a surge in trading on the January 2020 $18 calls. Shares last traded around $17.80, making this option at-the-money.

In other words, in a volatile sector of the market, one trader is betting that shares will at least hold their own over the next 198 days. But at a cost of $2.22 per option, or $222 per contract, it's a pricey bet. If shares stay just under $18, the option will expire worthless.

To make money by expiration, shares will need to move north of $20, or more than 10 percent over the strike price.

In short, this bet is more bullish than it looks.

The volume on this trade also hints at the bullishness behind it. With over 21,920 contracts trading on Wednesday against a previous open interest of 45, this represents an 89-fold increase in volume.

Action to take now: This is an interesting and potentially lucrative bet on the gold space now. Given some of the recent comments about currency manipulation, it's also a potential way to make a speculative bet on gold heading higher. This trade looks very attractive as a way to play gold higher with relatively low risk.

Insider Activity: Dova Pharmaceuticals (DOVA)

Posted: 05 Jul 2019 03:00 AM PDT

Major holder adds to stake in beaten-down biotech company.

Insiders in the health, pharmaceutical, and biotech space continue to buy shares of their beaten-down companies near today's prices.

The latest big buy? At shares of one of the smaller biotech plays, Dova Pharmaceuticals (DOVA).

On July 3rd, the Perceptive Life Sciences Master Fund, which already owns more than 10 percent of shares and has a seat on the board of directors, added to their stake.

The fund bought 20,541 shares, paying just under $300,000. But this isn't their first buy with this company. They also bought shares on June 28th, that time picking up over 427,000 shares and increasing their stake by over $5.7 million.

Founded in 2016, Dova is a pharmaceutical company focusing on acquiring and developing drug candidates specifically for thrombocytopenia disease. Shares have traded between $6 and $30 in the past year, and have recently started to rally, closing 9 percent higher on Wednesday just under $18 per share.

Action to take now: With major shareholders adding to their stake, and with a 52-week high at $30, shares have plenty of room to run. As a smaller pharma play, there are fewer options trades available, making shares one of the more interesting bets in the market right now.

Currency Manipulation: The Next Trade War?

Posted: 05 Jul 2019 03:00 AM PDT

With trade deals underway, Trump hits Europe and China on currency programs.

Although global markets were largely unchanged on Thursday, with U.S. markets closed, traders are starting to keep a closer eye on the currency markets.

While largely unchanged right now, recent comments from President Trump indicated that currency manipulation by China and Europe was a problem, and that the United States should follow suit.

Tweeting on Wednesday, the president said: "China and Europe playing big currency manipulation game and pumping money into their system in order to compete with USA. We should MATCH…"

Arguably, all countries with central banks can "manipulate" their currency. A weaker currency in one country, relative to another, however, is traditionally viewed as one having a competitive advantage on trade. Consequently, this may indicate another theater in which to engage in a trade war with other countries.

Action to take now: None at the moment, as this was just one tweet from the President. However, a currency war is little different than a trade war in that both sides lose, although one can lose more than the other.

Investors who want no part of those shenanigans with their money—a store of wealth—should consider the traditional monetary hedge, gold. The market has been kind to gold lately, as the metal remains near a six-year high.

U.S.-China Trade Talks to Resume Next Week

Posted: 05 Jul 2019 03:00 AM PDT

Talks resuming after G20 trade war "truce" declared.

The United States and China will resume talks on trade issues next week, according to President Trump's chief economic advisor Larry Kudlow. The talks will be held by phone and face to face.

The talks represent a new start after previous talks ended with a stalemate. The stalemate was seen as broken by the G20 meeting, when Presidents Trump and Xi agreed to a truce on trade issues.

As talks have started again, President Trump is committing to hold off on imposing an additional $300 billion in tariffs against China, one of the largest trading partners the United States has.

Talks previously fell apart after the Chinese reneged on trade language that had previously been negotiated. Whether that will change in subsequent calls or meetings remains to be seen.

In addition to declaring a truce, both sides offered some concessions. President Trump allowed Chinese firm Huawei to do business with the U.S., and China agreed to large purchases of agricultural goods.

Positive trade war news typically helps the market move higher on a day-to-day basis, whereas bad news on trade issues tends to send markets reeling. So expect some bullishness in the markets while the negotiations restart, but be prepared for some volatility as they hit the inevitable snag.
Posted by: at

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)