This weekend we have news that Australian govt has proposed "Resource Super Tax" on miners. Link: Super Tax. The ultimate direction of any miners stocks, whether it is copper, iron, oil, gold, etc., depends the supply/demand and underlying movement in the commodity itself. In the long-run this tax may have little impact, if any, to significantly change the profit projections on RTP and others alike. However, near term it is bound to bring some fear out among investors and analysts as they go back to look for potential change in projections.
- Buy to open July $47.50 puts
- Sell to open May $47.50 puts
The calendar spread is marked $1.70, but bid/ask spreads are very wide here so I would caution overpaying. I would not pay more than $2.00 per spread. June does not have put strikes available below $52.50, but I can't imagine they won't be added sooner or later as the stock trades near $50.
Important thing is Theta decay on this calendar is on your side and Delta is bigger for July $47.50 puts vs. May $47.50. Additionally, the IV skew is also in our favor as May is at 59 vs. July at 48. If the stock doesn't make a move to $47.50 by May expiration, then it expires worthless and we sell June $47.50 puts for more credit. After June, depending on underlying price movement, the trade can be converted to bull put spread or bear call spread for further net credit. Lastly, the trade also makes sense as broader market appears to be going through a correction phase.
I will provide an update right here within the comment section once the order is executed. Use Friday's high of $52.50 on underlying stock for stop loss and to exit the trade.
Good luck!
