Today we are looking at applying a Bull Put Spread on Australia and Newcrest Mining Ltd
Analysis:
NCM is currently trading at $28.41
NCM has been trading in an uptrend since the lows at the beginning of March. Recently, it has been reluctant to push through resistance around $29.00, despite a continued rally in gold prices.
This lag coupled with the uptrend line should eventually lead to a higher share price for NCM with an eventual break of that $29 resistance. In the short term though, NCM may continue to track sideward, using either the uptrend line or the $27.50 level as support.
Back in April, NCM was also trading in a similar fashion, and so we suggested a Bull Put spread. If you had traded that strategy, you would have likely profited very well. Not much has changed since then with NCM continuing to show signs of sideward to bullish movement. It makes sense to once again suggest implementing a Bull Put, except with a June or July expiry and a sold leg at $27.50 or below.
Provided NCM remains above the sold leg come expiry, maximum profit is made. If NCM does continue higher in the shorter-term, then it is possible to close the trade early for a profit as well.
If you would like to learn how and when to use this strategy, and other strategies like it, then please contact us here at TradersCircle on 03 8080 5788. Alternately, you can download a free eBook off our website which runs through advanced strategies.