Options Trade of the Day
BHP Billiton Limited (ADR) (NYSE:BHP) Calls 
Friday, January 30, 2015

**OPTIONS TRADE OF THE DAY: Buy the BHP May 2015 45.000 call (BHP150515C00045000) at or under $2.80, good for the day. Place a protective stop limit at $1.10 and a pre-determined sell at $4.50.

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by Ian Harvey

January 30, 2015

Introduction

**BHP Ready For A Comeback!**

As you are aware there has been an historic drop in the price of oil, but this is not the only commodity that has suffered – and

BHP Billiton Limited (ADR) (NYSE: BHP), which is a global diversified natural resources company dealing in not only petroleum but also aluminum, iron ore, copper ore, and a host of other metals – is one such company that has been caught up in this downturn.

With a market cap of $119 billion, BHP is no small company — but just six months ago it was much, much larger. After peaking last July above $73, BHP has fallen 38% to its current level.

On a yearly basis, the price for BHP had reached its zenith at $73.91 and the nadir is recorded at $42.92, which has made the company a must on the radar of many Wall Street Analysts.

Technical Oulook

Shares of BHP Billiton Limited closed trade yesterday at 45.69.

The stock’s 50-day moving average is $47.50 and its 200-day moving average is $60.42.

The company has a market cap of $121.2 billion and a price-to-earnings ratio of 8.90.

Analysts Opinions

RBC Capital reiterated their underperform rating on shares of BHP Billiton Limited in a research report sent to investors last Friday morning. The firm currently has a $30.00 price target on the stock.

The company has also been the subject of a number of other research reports:-

• Analysts at Morgan Stanley upgraded shares of BHP Billiton Limited to an overweight rating and set a $37.00 price target on the stock in a research note Tuesday last week.

• Analysts at HSBC upgraded shares of BHP Billiton Limited from a neutral rating to an overweight rating in a research note Tuesday last week.

• Analysts at Deutsche Bank reiterated a buy rating and set a $38.00 price target on shares of BHP Billiton Limited in a research note on Friday, January 16th.

• Finally, analysts at Canaccord Genuity upgraded shares of BHP Billiton Limited from a hold rating to a buy rating in a research note on Friday, January 16th.

Three analysts have rated the stock with a sell rating, seven have issued a hold rating and eleven have assigned a buy rating to the stock. The stock currently has a consensus rating of Hold and a consensus target price of $44.00.

Conclusion

With the commodities crisis acting as a heavy weight on the mining sector in general, BHP has been suffering, however the company is sound through its heavy diversification, low operating costs and constant great dividends to the investor. Even though it has fallen far, a turnaround is likely to occur at any time, and this options trade will be well positioned to take advantage of this.

Therefore, based on the facts above the following options trade is recommended…..


**OPTIONS TRADE OF THE DAY: Buy the BHP May 2015 45.000 call (BHP150515C00045000) at or under $2.80, good for the day. Place a protective stop limit at $1.10 and a pre-determined sell at $4.50.


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