AEM Options Traders Lock In Quick 100% Profit

Subscribers to Schaeffer's Option Advisor just scored a 100% profit with the Agnico Eagle Mines Ltd (NYSE:AEM) November 44 put that we recommended for our August newsletter, released the last week of July. We're going to take a look back to see why we were initially bearish on the mining stock, and how the options trade unfolded.

At the time of our recommendation Friday, July 27, shares of Canadian gold producer AEM had been suffering on the charts, plunging on the back of a poorly received earnings report. The stock had also failed to overtake its year-to-date breakeven mark, and had shed more than 8% in 2018. Plus, AEM had moved back below the round $10 billion market cap, and broke below a trendline that connected its higher lows from March. 

What's more, we remarked that there was plenty of room for bearish analyst attention to drive AEM even lower. While four of the nine brokerages following Agnico Eagle stock carried a "hold" rating, the remaining five recommended it as a "buy" or "strong buy." In other words, despite the technical underperformance, most Wall Street firms still had bullish ratings in place. Furthermore, while short interest on AEM had more than doubled since the start of the year, it still remained 60% below its mid-2014 highs. We noted that the stock could get hit with stiffer headwinds as more shorts climbed on board.