Sandstorm Gold (SAND) is a Covered-Call Trading Sardine
Low stock price, reasonable implied volatility, and liquid contracts make it an covered-call candidate.
Sandstorm Gold (SAND) has been a “trading sardine” for me for well over a year. What does that mean? It means that it does not meet my criteria to be a core holding in my portfolio but it does have characteristics that make it a good trading vehicle.
The company is a small-cap gold miner with little debt. The firm recently reported $6.5 million in quarterly earnings on revenues of $23.3 million. Not highly profitable given that the market cap is about $1.57 billion. So nowhere close to being a peer of my long-term core holdings which include WalMart (WMT), Amazon (AMZN), JP Morgan Chase (JPM), and Disney (DIS).
Here is why I do like SAND. For the last five months it has traded in a price range between about $7.40 and $10.54. The firm stands to benefit from pressure on the US Dollar as our government piles more debt on top of the trillions borrowed in the last year. So potentially, the outlook is pretty good, especially considering the potential for another government stimulus program coming in early 2021.
But the real reason I have a little SAND in my portfolio is because of the option chain. The low price of the stock, the $1 spacing of the option contracts and the…
