DailyPlay – Opening Trade (NEM) – July 6, 2023

NEM Bearish Opening Trade Signal

View NEM Trade

Strategy Details

Strategy: Short Call Vertical Spread

Direction: Bearish

Details: Sell to Open 12 Contracts Aug 18th $42.50/$45 Calls @ $0.93 Credit per contract.

Total Risk: This trade has a max risk of $1,896 (12 Contracts x $158) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $158 to select the # shares for your portfolio.

Trend Continuation Signal: This stock is in a bearish trend and further downside is expected.

1M/6M Trends: Bearish/Bearish

Technical Score: 2/10

OptionsPlay Score: 98

Stop Loss: @ $1.86 Debit (100% loss).

Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that whenever there is a multi-leg option strategy, it should be entered as a single trade. 

Please note that these prices are based on Wednesday’s closing prices. Should the underlying move significantly during the pre-market hours, we will likely adjust the strikes and prices to reflect a more accurate trade entry. 

Investment Rationale

As equities continue to trade sideways on higher interest rate expectations, we turn our attention to Gold. The precious metal has continued to trade below its $1940 support level towards its $1866 support, and we see further downside. It also happens that NEM recently triggered both our sell signal on our Trade Ideas yesterday as well as an optimal bearish credit spread last night. With its recent rejection at its $43 resistance level and NEM’s underperformance relative to the gold miners I see an opportunity to add some short exposure in an asset class that is less correlated to equities. Look to sell the Aug $42.5/45 Call Vertical @ $0.92 Credit. 

NEM – Daily