President Trump has made a new announcement, calling for a certain industry to start moving to meet new demand caused by recent trade tariff rollouts. This has likely been analyzed deeply by some of the best and smartest traders in the market today. This is not a thesis; it is a fact that can be spotted by retail investors today, as long as they know what to look for and where.
The evidence is found in recent trading activity, but not just any type of trading activity. By spotting unusual call options activity in a specific stock, investors know that a group of traders (or one big trader) in the market have taken a strong view on the underlying name, considering that options carry an aspect of leverage and timing to them, increasing the stakes significantly for the trade.
Today’s scanning would have brought investors to shares of Rio Tinto (NYSE:), a multinational mining company that is now the subject of some of the benefits underlying in the recent announcement by President Trump, which directly calls for increased productivity in the mining sector and basic materials companies like Rio Tinto. Here is exactly what happened and why this stock might make higher highs soon.
Rio Tinto Rises on Deep-Sea Mining Order and Surge in Call Options
President Trump passed an executive order calling for increased deep-sea mining for minerals and other materials, as other nations might be reluctant to trade in the short term as these tariff negotiations drag on for a resolution. This order seeks to bring the United States more inventory from these materials as soon as possible.
Because the equipment and methods needed to get this done are Rio Tinto’s expertise, the stock stands in the middle of the storm of potential upside in the coming months and quarters, and the same reason why investors should be aware of it as a wise consideration for their portfolios moving forward.
Now, there is some evidence of underlying optimism in this stock, as taken by the recent price action during the announcement dates. Rio Tinto stock has managed to outperform the broader S&P 500 by as much as 10% over the past quarter, driven mostly by the past three-week rally after the announcement.
This momentum, in addition to the fundamental and valuation implications, drove call option buyers into this stock. These buyers make a profit if the price rises just in time before those contracts expire. Reportedly, up to 7,453 call options were opened for the stock looking for higher prices by May 2025.
Capital Advisors Bets $25.5M on Rio Tinto With 23% Upside Potential
As of late April 2025, institutional allocators from Capital Advisors decided to boost their Rio Tinto stock holdings by 3.7%. While this may not sound like much on percentage terms, when investors quantify this move, they can land on a net position size of up to $25.5 million today.
This new allocation shows another sign of recent optimism about the stock’s momentum compared to the S&P 500, but these institutions are not only momentum players. They must always justify their decisions behind strong fundamentals, which are more present than ever in this new industry tailwind pushed by President Trump.
Whatever these investors saw for Rio Tinto might be the same trend spotted by Wall Street analysts, as they have kept their consensus price targets of $73 per share on Rio Tinto stock. As of today’s prices, this view implies that there is enough reason and room to deliver a net rally of up to 23%, justifying the multi-million dollar positionings in the name.
Now, there is another added benefit for Rio Tinto shareholders, other than the upside. Considering that this name has been badly beaten down by the trade tariff uncertainty, its current level of only 80% of its 52-week high also delivers an asymmetrical risk-to-reward setup for investors.
Rio Tinto Offers 7.5% Yield and Upside Ahead of Earnings
With this low price, investors face limited downside with all of the upside still present and enjoy a higher-than-average dividend yield. Because Rio Tinto’s management is confident on this new future development for the business, they’ve maintained a dividend payout of up to $4.46 per share, translating into a 7.5% annualized yield today.
Whether investors get in this name for the dividend or for the upside, both angles can be validated by the stock’s technical setup and the fundamental reasoning behind upcoming demand and activity. These translate into much better earnings per share (EPS) outcomes that will undoubtedly appear by the time the next quarterly financial results are released to the public.
Taking these factors into account, the reason behind this conviction to buy more call options than usual is set, and investors can cherry-pick their positions ahead of a potential new rally.
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