logo

This stock is up 64% in the past year, and the charts point to even more gains

VIDEO2:4402:44
This one mining name is rallying back: Trader

Those who want to play copper's surge should look to shares of Australian-British mining giant Rio Tinto, according to TradingAnalysis.com founder Todd Gordon.

For starters, he believes that even after rising 42 percent in the past year, copper will continue its impressive run.

"The global economic recovery is well underway in base metals, specifically copper, which is accelerating ahead," he said Wednesday on CNBC's "Trading Nation." "So Rio's a good way to set this up," given that the company mines copper in addition to other industrial metals.

Looking at a chart of Rio Tinto dating back to 2009, Gordon said that the company's rally since mid-June has lifted it through a level of "resistance."

"You can see that the market has broken downtrend resistance right around the $42 to $45 region," said Gordon. "It looks like we should be able to continue up, and possibly challenge these old highs at about $60."

In other words, Rio Tinto could return to highs unseen since early 2011. But even in the short term, Gordon believes that the company could actually rally up to $55, a whopping 13 percent surge from Wednesday's levels.

As a result, Gordon wants to buy the October monthly 50-strike calls and sell the October monthly 55-strike calls for about $1 per share, or $100 per options spread. If Rio Tinto does close above $55 on Oct. 20, which is when the October monthly options expire, then Gordon would see a profit of about $400. The trade breaks even at $51.

However, if Rio Tinto remains below $50, Gordon stands to lose that entire $100. In order to avoid that, Gordon plans to exit the trade if its value falls to $50.

Rio Tinto is up 64 percent in the past year.