Bet on this gold miner's impressive rally: Trader

Newmont Mining has soared this month, rising more than 22 percent for October. And one trader is betting that the mining company could add more to its impressive gains.

Andrew Keene of AlphaShark said Newmont's stock has been "absolutely on fire," and the charts still look bullish.

He said the stock has broken above its 50-day moving average, turning the previous resistance level into support at $18. However, he said Newmont will likely run into more resistance as it nears its 200-day moving average.

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"We haven't been above the 200-day moving average since June. So I think it has some headway at $20," he said Thursday on CNBC's "Trading Nation." "If I don't think it's going above $20 but I think the chart is bullish, I can think about a different strategy."

To act on his thesis, Keene is selling the January 18-strike put, and for protection, buying the January 17-strike put for 30 cents. The trade is profitable if Newmont shares are above $17.70 by January expiration.

The stock opened lower on Friday morning, trading at about $19.60. A move to $17.70 would be about a 10 percent drop.

"I like this trade because the stock can move higher, it can be flat, or it can move lower, as long as it doesn't move lower more than 10 percent," Keene said.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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