Trade Alert: Top Names + Gold Doré

Trump's "Big, Beautiful Bill" looks bullish for gold. Plus, a stock apparently trading for less than the cash on its books.

If Gustave Doré painted a man pouring gold doré.

The Big, Beautiful Bill

It seems unlikely the Republicans are going to rein in their “Big, Beautiful Bill”, as I suggested in the post below. That means gold and bitcoin are likely going higher.

We placed a couple of trades on bitcoin-related names last month,

And a bet on a gold name last week,

And now we have one on a gold doré name, that was #4 on our top ten last night. Gold doré (pronounced dor-ay) is a semi-pure gold alloy—usually a mix of gold and silver—that is produced at mining sites before final refining elsewhere. It’s usually comprised of >80% gold, with most of the balance being silver.

Our trade is a bet on our gold doré top name rising in price between now and December due to gold rising in price. But there’s also a potential catalyst with this one, a mine that might be reopened by then.

An Apparently Mispriced Stock

Our second trade today is on a biotech stock with more cash and marketable securities on its books than its market cap. If you subtract its total liabilities from that cash and marketable securities, you still have more short term assets than its market cap. The disconnect here seems to be that sites like Seeking Alpha and Chartmill are showing $500 million less in marketable securities on the company’s balance sheet than the company’s own most recent quarterly data shows. Presumably, when this gets corrected, the stock price will get rerated.

Our maximum upside is uncapped with both of these trades, and our maximum downside is 100%.

Details below.

Today’s Top Names Trade

The stock is SSRM Mining (SSRM 0.00%↑), and our trade is buying the $12 strike calls on it expiring on December 19th, for $1.80. The max gain on 4 contracts is uncapped, the max loss is $720, and the break even is with the stock at $13.80. This trade filled at $1.75.

Today’s Mispriced Trade

The stock is Fulgent Genetics (FLGT 0.00%↑), and it’s actually not trading for less than cash, but it is trading for about 55% of book value. After talking with Chartmill and looking at the filings, it turns out that the company’s consolidated balance sheet had all marketable securities on one line, but its actual 10-Q broke them up until short-and long-term assets. In any case, our trade is buying the $22.50 strike calls expiring on October 17th, for $2. The max gain on 4 contracts is uncapped, the max loss is $800, and the break even is with FLGT at $24.50. This trade filled at $1.94.

Exiting These Trades

• SSRM: I’m going to open a GTC order to exit half of these contracts at $4, and aim to get out of all of them before expiration.

• FLGT: I’m going to open a GTC order to exit half of these contracts at $4, and aim to get out of all of them before expiration.