DailyPlay – Conditional Bullish Opening Trade (VALE) – November 7, 2022

VALE Conditional Bullish Opening Trade

View VALE Trade

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish

Details: Buy to Open 20 Contracts Dec. 2nd $13.50/$15.50 Call Vertical Spread @ $0.96 Debit.

Total Risk: This trade has a max risk of $1,920 (20 Contracts x $96).

Trend Continuation Signal: This is a Bullish trade on a stock that is experiencing a bullish trend.

1M/6M Trends: Bullish/Mildly Bullish

Technical Score: 7/10

OptionsPlay Score: 95

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. 

Please note that this is a CONDITIONAL trade. We will only enter the trade when the condition is met, which is IF the stock pulls back to the $13.75 – $13.50 area. Also note that the cost basis, premium paid, as well as the number of contracts when we open this trade will therefore be different from what we post today. This condition is only valid for this week.

Investment Rationale

Equities had a good Friday rally, but still had a horrible week. What had a good Friday and a good week were metals stocks, as dollar weakness and prior non-breakdowns in gold and copper finally took a toll on those recently positioned short.

One name that I like in the copper space is VALE. It has side-by-side daily Sequential -13s in July and September and last week came back down to bounce on its uptrend line (in purple) and also backfilled against the downtrend line (in green) that it had broken out above in early-October.

As such, let’s look to buy a VALE Dec. 2nd $13.50/$15.50 call spread anytime this week IF the stock pulls back to the $13.75 – $13.50 area. Then, and only then, will we look to buy that spread at the then current mid-price.

VALE – Daily