Condor Options

The Thesis: Newmont Mining goes into the ground and comes back out with lots of shiny and valuable rocks. (There’s some fundamental analysis for you.) The real story here is that the stock had a good and important day yesterday, breaking its recent downward trendline and on much higher than average volume, to boot. And this looks like a steady performer: even with all the poor market action late last year, NEM never broke its 100-day moving average. There is broader sector support, and the basic gold story isn’t going to change any time soon (look at GLD yesterday, too).

The Trade: So this is obviously a nice setup, but you may want to wait for a little pullback before entering a full position. With a 2-day RSI at 97, it probably wouldn’t hurt to enter this one gradually. This a really straightforward bullish play, but it might take some time to work through. As usual, we’ll throw out a couple choices:

• The June 60 calls are $3.20. The stock hit 60 back in early 2006, and if it’s really resuming a strong uptrend, there isn’t any obvious resistance in the way of it hitting 60 again.
• Smarter money will make this a LEAPs income play. So you could buy the Jan 09 65 calls for $4.30, and sell the Jan 08 55 calls right now for $1.00. When people take some profits (which could be tomorrow morning for all we know, lol), you can just buy back those calls for a quick $0.15 profit or whatever and then sell Feb.

Disclaimer: Actually following our bonus trades will result in physical, emotional, spiritual, familial, social, ecological, and most importantly fiscal death. All the gold in the mines of Ghana will not be sufficient to save you should you unwisely choose to follow any trades ever mentioned here.