DD Upside Call on $AU Anglogold Ashanti prior to earnings

TLDR Thesis: Anglo Ashanti Gold has under-performed the Gold Miners ETF $GDX by 13%. In a positive Macro environment, and tail end of a technical pattern, and earnings release in 3 weeks. Expecting a 10-13% catch up move. Buying May 20 AU 25 strike Call options. This year the Gold miners have been up an average of 8% while the S&P 500 is down 8%. Gold has held a key level of 1919 per oz on the Daily chart, and looks to be finishing the handle formation of the cup and handle formation on the Monthly futures chart. Beyond the underlying asset chart, gold remains a longer-term Inflation hedge, protects against currency devaluation (there are more currencies than the dollar), and in general has a negative correlation to market fear. On a more micro level, the company in 2021 had a down year after a stellar 2020, seeing mine closures and increased AISC (All-In Sustaining Costs) as it resolved a number of issues with its Ghanaian Mines pertaining to new laws. 2022 has seen the reopening of the mines, and completed acquisition of Corvus Gold a junior miner in Canada, all the while driving down it’s relatively high AISC. For the Technicals, it is now completing a downward sloping Wedge Pattern, headed into earnings at the beginning of May. Momentum indicators like stochastics and Chaikin money flow show a rising move and momentum, the 21 Day MACD will be the last confirming indicator, which is curving up from an extended down slope, and it is looking likely we will see a positive crossover this coming week. The expected value gain is between 10-13%. Given the relative underperformance to the Vaneck Gold Miners ETF $GDX of 13%, I expect a catch-up rally. Which represents a $2.36-$3.08 move, or about a 2x earnings multiple growth. The trigger or event for this move are the May 9th earnings release that givent he price rise of gold should create positive earnings expectations pushing $AU’s stock price. My plan to buy $AU May 20 call options strike $25, Max EV of 0.80 and I expect to sell at 66% of Max EV prior to May 9th earnings release.

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DD Upside Call on $AU Anglogold Ashanti prior to earnings

bullish

TLDR Thesis: Anglo Ashanti Gold has under-performed the Gold Miners ETF $GDX by 13%. In a positive Macro environment, and tail end of a technical pattern, and earnings release in 3 weeks. Expecting a 10-13% catch up move. Buying May 20 AU 25 strike Call options.

This year the Gold miners have been up an average of 8% while the S&P 500 is down 8%. Gold has held a key level of 1919 per oz on the Daily chart, and looks to be finishing the handle formation of the cup and handle formation on the Monthly futures chart. Beyond the underlying asset chart, gold remains a longer-term Inflation hedge, protects against currency devaluation (there are more currencies than the dollar), and in general has a negative correlation to market fear.

On a more micro level, the company in 2021 had a down year after a stellar 2020, seeing mine closures and increased AISC (All-In Sustaining Costs) as it resolved a number of issues with its Ghanaian Mines pertaining to new laws. 2022 has seen the reopening of the mines, and completed acquisition of Corvus Gold a junior miner in Canada, all the while driving down it's relatively high AISC.

For the Technicals, it is now completing a downward sloping Wedge Pattern, headed into earnings at the beginning of May. Momentum indicators like stochastics and Chaikin money flow show a rising move and momentum, the 21 Day MACD will be the last confirming indicator, which is curving up from an extended down slope, and it is looking likely we will see a positive crossover this coming week.

The expected value gain is between 10-13%. Given the relative underperformance to the Vaneck Gold Miners ETF $GDX of 13%, I expect a catch-up rally. Which represents a $2.36-$3.08 move, or about a 2x earnings multiple growth.

The trigger or event for this move are the May 9th earnings release that givent he price rise of gold should create positive earnings expectations pushing $AU's stock price.

My plan to buy $AU May 20 call options strike $25, Max EV of 0.80 and I expect to sell at 66% of Max EV prior to May 9th earnings release.

read-time
1 min
25.00
Target Price
9/ 10
Confidence
1-2 Months
Timeframe
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Earnings Release
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News
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SEC
Filing
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Sentiment
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