Why RICK RULE is selling puts on NEWMONT Gold Corp

Unlocking Rick Rule’s Investment Strategy: Selling Puts on Newmont!

Rick Rule, celebrated as one of the globe’s most triumphant commodity investors. In this video, Rule unveils an interesting move: aggressively selling puts on Newmont.

Watch the full Rick Rule interview with Steve Barton on @inittowinit928 here: https://youtu.be/sjQOZ6uNti8?si=U0kCh8LI4RQfH3lk

Let’s unravel the intricacies of this strategic financial play and try to understand the rationale behind Rule’s decision.

🎙️ Insights from the Interview:
In a one-minute segment, Rule shares his growing attraction to Newmont, spurred by the recent acquisition of Newcrest. He points out the company’s pivot towards selling tier two assets and focuses on enhancing the acquisition cost of Newcrest while advancing the combined company’s tier one assets.

📉 Seizing Opportunity Amidst Weakness:
Despite previous reservations about Newmont’s portfolio, Rick Rule sees recent stock weaknesses as a strategic opening. The video guides you through the nuances of selling puts, using optionsprofitcalculator.com for a real-world example. This walkthrough provides an in-depth look into Rick’s thought process and strategy execution.

💡 Decoding “Aggressively Selling Puts”:
Ever wondered what it means to “aggressively sell puts”? The video explores various expiration dates and strike prices, shedding light on Rule’s potential tactics. Dive into the possible outcomes, from retaining put income to scenarios where Newmont’s stock falls below the strike price upon expiration.

💸 Financial Implications:
Enter a hypothetical scenario involving a substantial number of put contracts, revealing the financial implications for Rick Rule. Discover how he could accumulate significant premiums or potentially acquire Newmont shares at a reduced price. The analysis dissects Rule’s perspective on current market value, his willingness to buy shares, and the underlying value proposition inherent in this strategy.

🤔 Unraveling Rick’s Motivations:
While dissecting his words and actions, we speculate on his motivations. Could this strategy serve as a means to leverage his cash holdings while awaiting potential stock acquisitions? It’s crucial to note that these interpretations are based on the available information.

👍 Engage and Explore:
If you found this video intriguing and informative, give it a thumbs up! Dive into our curated playlist of videos designed to enhance your skills as a mining stock investor. Join us on this investment journey, and we’ll see you over there! 🌐✨

Disclaimer:
📌 This content is for educational and informational purposes only. It does not constitute financial advice, investment recommendations, or endorsement. Always conduct thorough research before making any investment decisions. Investing in options involves risks, and past performance is not indicative of future results.

#rickrule #goldstocks #newmont

One of the world’s most successful commodity investors, Rick Rule, just said that he’s aggressively selling puts on Newmont. So in this video, we’re going to go over what that means and look into why he might be doing it. But first, let’s watch a 1 minute clip from this

Interview where you can see what Rick said about Newmont. Newmont I’m increasingly attracted to. I have objected to Newmont for years in that they have too many tier two deposits and not enough tier one deposits. The recent acquisition of Newcrest by Newmont has led to some weakness in the stock in Newmont.

I always like things that get cheaper, but in particular, it is focused management’s attention on selling tier two assets to lower the acquisition cost of Newcrest while continuing to develop their joint portfolio of tier one assets. So I think Newmont is moving determinately in the right direction.

I haven’t added to my position in Newmont, but I’ve been pretty aggressively selling puts on Newmont, either pocketing the put income or having the stock being put to me cheaper than it already is. I’m going to show you what it means to sell a

Put and how you can make money from doing this. I’m going to put that down in writing here after we go look at a put example. Okay, so we’re on the website optionsprofitcalculator.com and we’re going to go to a cash secured put and then we’re going to put in the symbol for Newmont.

And this is the current stock price, $40.14. We’re going to write it. Writing a put is the same as selling a put. And then we’re going to go here and we’re going to select our option for clarity. This isn’t investment advice and always do lots of your own research before

Investing any of your hard earned money. And when you’re dealing in options like this, it can be very, very risky. So when it comes to selling a put, you could sell one that has an expiration date that’s not very long from now at all. Like for example, here’s one that expires in six

Days, or you could go a few months out or as long as a year or two out. So let’s Click on the one that’s January 2025. So this expires about a year from now. And let’s look at the strike price of 37.50. So the current stock price is $40.14.

So this would be giving somebody the right, but not the obligation to sell you 100 shares of Newmont at $37.50 on or before January 17, 2025. And for that privilege, they’re going to be paying you the price of this option, and you’re going to get that immediately.

You’re going to get that cash immediately. But whatever you see here, you have to multiply that times 100. So it would be $360 per contract that you sell. Per put that you sell, you’re going to receive $360 immediately. So based on this interview, we don’t know exactly

Which put contracts that Rick Rule is selling, but let’s assume that he’s selling the one that expires January 17, 2025 at a strike price of 37 50, which is $2.64 lower than today’s closing price. He said he’s aggressively selling puts. I don’t know what that means. What aggressively means other than he’s

Doing a lot of them. So let’s say he sells 1000 put contracts at $3.60 each. Well, for each contract, he would be receiving $360 times 1000. So he’d receive a $360,000 deposit. But now let’s look at what that means. What could be the results of doing this?

So the first option is if Newmont is above 37 50 when January 17, 2025 rolls around, then nothing happens. He just gets to keep the $360,000 that he receives. Well, actually, this is his to keep, no matter what happens. But on the other hand, if Newmont is below 37.50

On this date, that option is going to have value to the owner, and the owner of those options is going to exercise them, meaning that Rick will be required to buy 100 shares of Newmont for each contract that he sold. So he’ll be required to buy 100,000 shares of Newmont at 37.50.

So he better have … what would that be? $3,750,000 available to buy his 100,000 shares of Newmont that he’s required to buy. And he’s going to have to buy 100,000 shares regardless of whether Newmont is at 37.49 or Newmont has gone bankrupt and is trading for a nickel.

But he’s going to have to pay this price regardless. Now, in that interview, he made it seem like he thought Newmont was already trading at a pretty good price where he would want to buy the shares of stock at the current price. And he also mentioned that he’s selling puts that

May get put to him at a lower price. So based on that, we know the strike price he’s choosing is below the current stock price. So maybe it’s 37.50. Maybe it’s a $39 strike price. Maybe it’s a $30 strike price. We don’t know based on that interview, but we do know

That the strike price is lower than the current price. So I think what he’s thinking is that, number one, Newmont is already trading at a pretty good price at which he would like to buy shares of number two, that he’s getting paid a fat premium immediately for selling these contracts to people.

And number three is that if it gets put to him, if the price of Newmont ends up being below the strike price at expiration, he’d be happy to own the shares anyway. So that’s why he’s willing to do it. And he’s getting paid a nice sum of money

For those people to have the privilege to sell him those shares at a potentially lower price. So basically, he thinks it’s good value today, and if it gets even cheaper, it’ll be even a better value. And maybe those shares get put to him, maybe they don’t.

But anyway, he’s willing to buy them, whether it’s at today’s price or at a lower price in the future. But regardless of whether the stock price goes up or down, this $360,000 is his to keep, and he can do whatever he wants with it in the meantime, I

Have heard him say in other interviews that he’s holding a lot of cash right now. So he may see this as a way to make his cash earn even more cash in the meantime. So he’s setting aside $3.75 million in case he has to buy these shares.

So in the meantime, over the next year, maybe he’s getting 5% in treasuries on this cash. Plus, he can do something with this cash to also earn money on that cash in the meantime. So while he waits, maybe this stock gets put to him. Maybe the price of Newmont goes

Down over the next year. But he’s betting that it doesn’t, because he’s betting that it’s already a low price and that a year from now, it will likely be higher than where it’s at now. But it’s worth noting that these aren’t his words. Well, except what you saw (him say) in this video.

This is just me trying to get inside of his mind to figure out what he’s thinking in terms of selling puts on Newmont. But anyway, if you like this video, please give it a thumbs up. And next, watch this playlist of videos that are going to make you a better mining

Stock investor and I’ll see you over there.