Base metals mining company
BHP Group (BHP) has traded flat over the past year. One trader sees shares trending higher in the coming weeks.
That’s based on the July $62.50 calls. With 58 days until expiration, 47,106 contracts traded compared to a prior open interest of 702, for a 67-fold rise in volume on the trade. The buyer of the calls paid $1.70 to make the bullish bet.
BHP shares recently traded for about $60. So shares would need to rise by about $2.50, or 4.1%, for the option to move in-the-money. That’s well within BHP’s trading range over the past year, given its 52-week high of $69.00.
Besides trending higher over the past few months, shares are attractively valued at about 12 times forward earnings.
Metals prices remain robust, which bodes well for mining companies such as BHP, which produces iron, copper, and other key metals.
Action to take: Investors may like shares here, which could continue to the high $60 range in the coming months following its uptrend higher.
Plus, shares pay a dividend of 5.1% at current prices.
For traders, the July $62.50 calls stand a good chance of moving in-the-money, and could see mid-to-high double-digit returns.
Traders should look to take profits if shares get to the high $60 range, as that’s where the stock last saw a top before selling off.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.