Allied Nevada Gold Corp (ANV) is a gold and silver miner in the state of Nevada. The company’s stock is currently trading around $4.15 in a 52 week range of $3.54-$41.02. The stock has been in free fall for most of the year, losing over 86% year to date. Despite the weakness the stock has shown this year we have seen some bullish unusual option activity in ANV today. Earlier in today’s session we saw a trader sell 2,300 of the ANV Dec 4 puts for $0.45. This is a very bullish trade and indicates that this trader strongly believes shares of ANV will be above $4.00 on December expiration. Although the chart is very weak in ANV, this high conviction bet signals the opportunity for a covered call in ANV. This trade will profit if ANV rallies, trades sideways, or even sells off to anywhere above $3.50.
Trade: Buying 100 shares of ANV at $4.15 for every Dec 4 Call sold for $0.65
Reward: $50 per 1 lot
Breakeven: $3.50
Should shares of ANV close above $4.00 on December expiration this trade will net its maximum potential profit of $50 per 1 lot. This trade is also profitable anywhere above $3.50. If the stock closes above $4.00 on expiration this trade will net an annualized return of 109.40%.
