DailyPlay – Opening Trade & Portfolio Review – February 12, 2024

DailyPlay Portfolio Review

Our Trades

BA

Bullish Debit Spread. We entered a small position to see if Boeing has bottomed here. Looking for a breakout to close its $245 gap.

NOC

Bullish Debit Spread. After adding another 2% exposure, NOC is breaking out to new recent highs and looks closer to closing the gap that is our target.

ORCL

Bullish Debit Spread. We are waiting for a breakout above $118 towards the $128 highs.

RSP

Long-term play on the S&P Equal Weighted Index. Price consolidated in the last 2 weeks but showing bullish price action at the $155 level. We will continue to hold this position. 

NEM Bullish Opening Trade Signal

Investment Rationale

Gold mining has had a tough year to the year, tumbling 13% to start 2024, while the equity markets raced to new all-time highs. However, the selloff has gotten so bad, there are some signs of exhaustion and a potential opportunity to play for a bounce. Gold itself continues to trade within spitting dance of all-time highs but miners have not held up as well. As NEM trades to a new 52-week low, I see this as an opportunity to add a small amount of exposure in gold miners. 

Technical Analysis

There is no way to sugarcoat it, NEM’s chart looks terrible. However, signs that there is exhaustion on the selloff suggests that we may have potentially hit rock bottom. Since the stock made 52-week low in Aug 2022, subsequent lows made on the weekly chart has been coupled with positive divergence. Momentum no longer confirms new lows in price, which suggests a potential for a bounce. We also see this on the Daily Chart as well. Even a bounce back to its Dec highs represents a 30% rally, making the risk/reward quite attractive. 

NEM – Daily

Fundamental Analysis

NEM’s selloff has pushed its valuation to under 15x forward earnings, despite analysts expecting revenue growth of 50% growth and 40% in EPS. This makes the valuation compelling when attempting to “catch a falling knife.” The downside in my opinion is limited due to its valuation and nearly 5% dividend yield, which provides further support for this stock. 

NEM Trade Details

Strategy Details

Strategy: Long Call

Direction: Bullish Calls

Details: Buy to Open 10 Contracts April 19th $32.50 Calls @ $2.00 Debit per contract.

Total Risk: This trade has a max risk of $2,000 (10 Contracts x $200) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $200 to select the # contracts for your portfolio.

Counter Trend Signal: This is a bullish trade on a stock that found support and is expected to bounce higher.

1M/6M Trends: Bearish/Bearish

Relative Strength: 2/10

OptionsPlay Score: 90

Stop Loss: @ $1.00 Credit. (50% loss of premium paid)

View NEM Trade

Entering the Trade

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

Please note that these prices are based on Wednesday’s closing prices. Should the underlying move significantly during the pre-market hours, we will likely adjust the strikes and prices to reflect a more accurate trade entry. 

View NEM Trade