Buy mining stocks based on weakness during this time of uncertainty, Simon Ho, executive director at Triple 3 Partners, told CNBC in reference to the inflation in China and carbon taxes emerging in Australia.
"If a stock price moves down, selling one-to-two month call options seems like a good idea," he said. Ho, added that he is positive on copper and expects a higher refined market in the second half. He recommends buying BHP Billiton and RIO Tinto
on weakness, "given the uncertainty."
Ho added that China's inflation data signal a high potential for more rate increases, noting that there are a lot of underlying strong fundamentals in the Chinese economy. He said he looks at the metals market, specifically, the London Metal Exchange warehouse, as a leading indicator.
"If you own the underlying stock and you still like it, perhaps the better way to do that is by using options, so you can sell out your stock and replace it with an equivalent position, but expose to buy options," Ho advises his clients.
"With the uncertainty that abounds, you are not going to be faced with an explosive potential upside," Ho said.
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Simon Ho owns shares of BHP and RIO.