Trade Alert: A Miner Minting Money
Another underhyped company in the tangible economy that's crushing it.
Excellent Technicals And Fundamentals
This is one of those companies that’s not a household name, but is firing on all cylinders. I’ve got my own bullish and bearish screens set up on Chartmill and this one came up again recently. It’s got an aggregate fundamental rating of 7 (out of 10), a profitability rating of 10, and a Piotroski F-Score of 9 (out of 9).
On the technical side, this stock scores an 8 out of 10 overall, along with a 7 out of 10 set-up rating. The set-up rating looks for the sort of consolidation in a chart that often presages a subsequent move higher.
With this one, we’re aiming to make ~100% if it climbs another few percent over the next several weeks.
Details below
The company is Alpha Metallurgical Resources (AMR 0.00%↑), which mines metallurgical coal in Appalachia and sells it all over the world. The trade is a vertical spread expiring on August 18th buying the $160 strike calls and selling the $165 strike calls for a net debit of $2.45. The max gain on 2 contracts is $510, the max loss is $490, and the break even is with AMR trading at $162.45.
Exiting This Trade
For each debit spread trade, I’m opening a Good ‘till Canceled limit order to close it at a net credit of about 90% of the spread (the difference between the strike prices of the options). Here, we have a $5 spread ($165-$160), and 90% of $5 is $4.5, so that’s where I’ll be placing my limit order to exit it. If that order doesn’t get filled over the next few months, I’ll lower the limit price as necessary as we get closer to expiration.
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Exited this call spread at $4.50 today for a gain of 84%.