Gold Fields Ltd. (GFI) specializes in the exploration and mining of gold in South Africa, Ghana, Australia, and Venezuela. Gold Fields is the world’s fourth-largest gold company and is estimated to have gold ore reserves of 65 million ounces and is based in Parktown, South Africa. On Wednesday, 22 November, Gold Fields received local approval to purchase the South Deep Gold mine in South Africa for $2.5 billion. This will increase the number of substantial Gold mines the company possesses in South Africa to three.
In other news, Gold Fields announced on 23 November it would be forming a major new strategic alliance with Sino Gold (OTC: SIOGF.PK) of Sydney, Australia. It is thought the alliance will combine Gold Fields’ technical knowledge with Sino Gold’s exploration and Chinese marketing experience. The alliance will create a jointly owned and funded group targeting mining projects in China. Many analysts think there are substantial untapped gold reserves in the Chinese mainland and the companies hope this agreement will allow them access to new opportunities.
Sino Gold will manage the exploration for new projects and Gold Fields will manage the development and operation of any new projects identified under the agreement.
Sino Gold has operated in China since 1996, and it’s Jianchaling Mine has produced nearly one half million ounces of gold in the last eight years. This mine will not be part of the alliance agreement. Sino Gold is thought by many to have a “first mover” advantage in China and is uniquely positioned to take advantage of new opportunities in the country.
In related news, Gold was marginally higher Monday advancing $1.20 to $645.60 on the Chicago Board of Trade.
Taking a look at Gold Fields’ December covered calls, maybe we can identify an intriguing investment opportunity. Experienced traders will consider a covered call investment strategy if they are neutral to bullish on a stock. PowerOptions website offers an excellent covered call example.
| DEC $17.50 Covered Call for Gold Fields Ltd. (GFI) $ 17.60 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| OPTION | Expiration/Strike | Opt. Bid |
%Dnsd. Prot |
%If Unch. |
%If Asgnd |
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| GFILW | 06 DEC 17.50 | $0.70 | 4.00% | 3.60% | 3.60% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Because the stock options expire on December 16, 2006 (19 days) the potential profit of 3.6% is more than respectable. In addition, the covered calls stock options trade offers more than adequate downside protection of 4%.
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[tags]South Africa, Sino Gold, Australia, China, Chicago Board of Trade, GFI, Gold Fields Ltd., covered call example, covered call investment strategy, investment strategy, iron condor, option income, options trading, poweroptions, selling naked puts, stock option trading, stock options[/tags]