Wheaton Precious Metals Surges 4.26% on Bullish Momentum Amid Valuation Concerns

Summary
• WPM trades at $117.64, up 4.26% intraday, hitting a 52-week high of $118.95
• DCF analysis suggests shares are 34.6% overvalued, while PE ratio of 51.2x far exceeds industry averages
• Options chain shows heavy call buying above $110 strike, with implied volatility surging to 40–60%

Wheaton Precious Metals (WPM) is trading at its highest level in over a year as bullish momentum accelerates. The stock has surged 86% year-to-date, driven by a stronger outlook for gold and silver prices, but valuation metrics suggest caution. With the precious metals sector rallying—led by Newmont’s 5.97% gain—investors are weighing whether WPM’s rally has already priced in future growth or if the stock remains undervalued.

Commodity Price Optimism and Streaming Model Resilience Fuel Rally
WPM’s intraday surge to $118.95 reflects renewed optimism about gold and silver prices, which directly benefit streaming and royalty companies like Wheaton. The firm’s portfolio quality, contract pipeline, and balance sheet strength have attracted investors reassessing resilience across commodity cycles. However, a DCF analysis from Simply Wall St. estimates intrinsic value at $115.66, implying current pricing is 34.6% overvalued. Despite this, the stock’s 51.2x PE ratio—well above the Metals and Mining industry average of 20.9x—suggests investors are paying a premium for its growth profile and low-risk cash flow model.

Precious Metals Sector Rally as Newmont Surges 5.97%
The precious metals sector is broadly higher, with Newmont (NEM) leading the charge with a 5.97% intraday gain. This aligns with WPM’s rally, as both benefit from rising gold prices and improved mining margins. However, WPM’s valuation remains stretched relative to peers, trading at a 24.1x ‘Fair Ratio’ versus its current 51.2x PE. While Newmont’s lower multiple offers more margin of safety, WPM’s streaming model—focused on high-margin gold and silver—justifies some premium pricing for investors betting on sustained commodity strength.

Options Playbook: Leveraged Calls and Gamma-Driven Bets
• 200-day average: $92.08 (well below current price)
• RSI: 64.12 (neutral to overbought)
• MACD: 2.09 (bullish divergence from signal line)
• Bollinger Bands: Price at 113.17 (upper band), 105.88 (middle), 98.59 (lower)

WPM’s technicals confirm a short-term bullish trend, with price testing its 52-week high. Key support lies at the 200-day average ($92.08) and the 30D support zone (96.22–96.59). A break above $118.95 could trigger a retest of the 200D upper Bollinger Band ($113.17), but a sustained move above $120 would validate a new uptrend. The options chain shows heavy call buying above $110, with WPM20251219C118 and WPM20251219C119 offering high leverage and liquidity for aggressive bulls.

• WPM20251219C118 (Call, $118 strike, 12/19 expiry):
- IV: 38.53% (moderate)
- Leverage ratio: 42.80% (high)
- Delta: 0.5015 (moderate sensitivity)
- Theta: -0.3778 (rapid time decay)
- Gamma: 0.0560 (high sensitivity to price moves)
- Turnover: 3,365 (liquid)
- Payoff at 5% upside: $117.64 → $123.52 → max(0, 123.52 - 118) = $5.52/share
- Why it stands out: High leverage and gamma make this ideal for a short-term breakout play, with liquidity ensuring easy entry/exit.

• WPM20251219C119 (Call, $119 strike, 12/19 expiry):
- IV: 38.52% (moderate)
- Leverage ratio: 51.18% (very high)
- Delta: 0.4460 (moderate sensitivity)
- Theta: -0.3527 (rapid time decay)
- Gamma: 0.0555 (high sensitivity to price moves)
- Turnover: 4,299 (liquid)
- Payoff at 5% upside: $117.64 → $123.52 → max(0, 123.52 - 119) = $4.52/share
- Why it stands out: Highest leverage in the chain, ideal for aggressive bulls expecting a sharp move above $120. Gamma ensures rapid delta expansion if the stock gaps higher.

Aggressive bulls should consider WPM20251219C119 into a break above $120.

Backtest Wheaton Precious Stock Performance
The backtest of WPM's performance after an intraday surge of at least 4% from 2022 to the present shows favorable results. The 3-day win rate is 54.72%, the 10-day win rate is 56.69%, and the 30-day win rate is 61.81%, indicating a higher probability of positive returns in the short term. The maximum return during the backtest was 6.07%, which occurred on day 57, suggesting that WPM can deliver decent gains following a significant intraday surge.

Bullish Setup Confirmed: Key Levels to Watch for WPM Breakout
WPM’s 4.26% intraday surge confirms a bullish technical setup, with momentum indicators and options activity aligning with a breakout scenario. While valuation concerns persist—highlighted by a 34.6% DCF overvaluation and a 51.2x PE—improved gold prices and streaming model resilience justify the rally. The sector leader, Newmont (NEM), is up 5.97%, reinforcing the case for precious metals. Investors should monitor the $118.95 52-week high and the 200D support at $92.08. A close above $120 would validate a new uptrend, while a breakdown below $105.88 could trigger a retest of key support levels. Aggressive bulls should target WPM20251219C119 if $120 breaks.