ABX/Selozi - One of my all-time favorite stocks. They don't need to produce more if they are increasing the spread and they sold off a lot of less-productive mines so natural that total production will be down, but not too much and the margins are now huge! They are fairly priced at $17 with 0.80 earnings per share - it's just a great stock to have if gold does take off as they are highly levered and, if gold goes down, you can ride it out and accumulate more.
As a starter play on ABX, I like:
- Sell 5 ABX 2019 $15 puts for $2.60 ($1,300)
- Buy 10 ABX 2019 $15 calls for $5.70 ($5,700)
- Sell 10 ABX 2019 $22 calls for $3 ($3,000)
That's net $1,400 on the $7,000 potential spread for an upside of $5,600 (400%) if ABX hits $22 into Jan, 2019. Worst-case is you own 500 shares at net $16.40 ($8,200) but that's not a loss, that's just the entry cost. ToS says net $1,500 margin, so it's an efficient trade as well.
