Unusual Options Activity: Vale (VALE)

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  • International mining giant Vale (VALE) has fared well this year as a recovering global economy has increased demand for raw commodities. One trader sees this playing out even further. The March 2021 $18 calls just saw 17,700 contracts trade against a prior open interest of 788, for a 22-fold rise in volume.

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  • The trade, expiring in 107 days, is that shares will move nearly $3 per share higher, or about 17 percent. The trader paid $0.51.

    Based in Brazil, Vale is best known for iron ore and iron ore pellets. But the company also extracts minerals such as nickel, copper, gold, and silver among others. Iron ore is a key metal for infrastructure and other large-scale industrial projects.

    Shares of the company are up just over 21 percent in the past year, slightly better than the S&P 500 index. Revenue and earnings growth have exploded year-over-year based on the latest quarterly numbers, a trend likely to continue.

    Action to take: The uptrend in shares looks likely to continue. And the March $18 calls are the perfect vehicle, given the time until expiration, the cost of the option, and the likelihood of profit.

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  • Traders can look to grab high-double to low-triple-digit profits on shares, likely well before expiration. Look for a spike higher in prices to take profits, given the volatility in the commodity space.