DailyPlay – Pan American Silver (PAAS) – March 2, 2022

View PAAS Trade

PAAS Bullish Opening Trade Signal

Strategy Details

Strategy: Call Debit Spread

Strategy Direction: Bullish

Details: Buy to open April 14, 2022 $26/$30 Call Vertical @ $1.11 Debit

Bullish Trend Signal: This is a bullish strategy on a stock or ETF that is experiencing a bullish 1M trend. 

1M/6M Trends: Bullish/Neutral

Technical Score: 7/10

OptionsPlay Score: 124

Entering the Trade

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

Investment Rationale

With the Ukraine crisis continuing, many markets have recently turned around, including bond yields peaking; the dollar getting a bid; stocks still pulling back, and precious metals seeing new life after a long sleep time.  It is the latter that will be our focus for today’s Options Play, for we see the beginnings of a new upside breakout in Pan American Silver Corp. (PAAS).

Yesterday we saw a bullish closing breach of the horizontal, green-dashed line that represents the highs of the two-month trading range ($25.55) and a stall right against the downtrend line ($25.73 today and falling 5 cts./day) from the Feb. 2021 high (in light blue).  We think in short order that this will get a more substantial upside breakout that will exceed the November highs to target the unfilled gap between $29.94 and $30.26.

Therefore, we are going to look to buy the April 14^th $26/$30 call vertical spread at last night’s closing mid-price ($1.11) or better.  We are laying out only 27.75% of the strike differential.  The maximum gain on this is $2.89.  (Should we wake up to find that metals are down sharply Tues. morn, you could also consider the April $25/$30 vertical.)