Buy Alert: May 12, 2015

Buy Alert: May 12, 2015

 

Option Strategy:

Buy Joy Global $JOY July 17, 2015 $44.00 calls for $2.60 or better.

 

Commodity Outlook: Industrial Metals

Thanks to another round of recently announced Chinese economic stimulus, industrial metals are on the upswing.  Prices for lead, zinc, tin, and copper have increased sizably since late-March.

Of course, the recent upturn comes after a long period of low prices…

Thanks to the economic uncertainty surrounding China the past few years, industrial metals have been in the dumps.

But now, with the People’s Bank of China taking action to combat weak growth, we may be witnessing a long-term price bottom for industrial metals.

Here’s a great way to play a rebound in this industry…

 

Resource Trade: Joy Global $JOY

While $JOY isn’t necessarily a producer of industrial metals, it makes the essential tools required to bring them out of the ground.  The $4.3 billion market cap company is a leader in heavy mining equipment industry.

Much like the metals their equipment mines, shares of $JOY have been stuck in a lengthy downtrend.

But with industrial metals now on the upswing, $JOY may very well be on the verge of a breakout to higher prices.

So here’s what we’ll do…

Buy the $JOY July 17, 2015 $44.00 calls for $2.60 or better.

The current bid/ask spread for this contract is $2.10/$2.40.

Do not pay more than $2.60!

Our official entry price for performance tracking is $2.40.  Your price may be higher or lower.

Exit Strategy:

Remember, we want $JOY to trade higher.  Our first profit target is $47.50 while our second target is at $50.00.

Our risk control line for this trade is at $42.30.  If $JOY trades below that level, conservative investors should consider closing this trade to preserve capital.

Until next time,

Justin Bennett

***Editor’s Note*** Remember, I’m out of the office this Wednesday.  You’ll here from me again next week!

 

Category: Commodity Trading