Unusual Options Activity: Freeport-McMoRan (FCX)

Copper producer Freeport-McMoRan (FCX) just hit a new 52-week high and is up nearly 22% over the past year. One trader sees further upside ahead for shares in the coming weeks.

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  • That’s based on the April 26 $57 calls. With 15 days until expiration, 10,570 contracts traded compared to a prior open interest of 112, for a 94-fold rise in volume on the trade. The buyer of the calls paid $0.28 to make the bullish bet.

    Freeport-McMoRan shares recently traded for about $51, so shares would need to rally about 11.8% in the next two weeks for the option to move in-the-money. The stock has been in a strong uptrend since March.

    In the short-term, shares are getting overbought. The stock recently had a relative strength index reading of 79. Any reading over 70 is considered overbought. Shares are also well over their moving averages.

    Action to take: Shares look ready to take a breather in the coming weeks, rather than trend higher. Investors may want to look to buy shares on a pullback, perhaps to around $42 near FCX’s 50-day moving average.

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  • For traders, the April 26 calls are inexpensive enough to see triple digit gains, if shares manage to soar just slightly higher from here.

    Traders could make a modest gain in the next day or two, then look at short-term put plays to play a breather in shares.


    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.

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