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Only a week ago, Freeport McMoRan (FCX) was the target of a large bullish options trade. Today the copper giant is seeing more of the same.
Activity hit fast and furious in FCX’s July 16 calls out of the gate this morning. Large blocks changed hands for $2.20 to $2.50, pushing volume past 23,000 contracts by early afternoon. That makes it one of the busiest equity derivatives in the entire market so far today.
Calls fix the price where a security can be purchased. That can generate leverage from a stock rallying but also expire worthless if no move, or a small drop occurs. (See our Knowledge Center.) Today’s contracts are in the money, essentially letting investors chop the bottom $16 off the shares and capture any gains on a dollar-for-dollar basis.
FCX rose 1 percent to $18.21 in afternoon trading. The company has struggled with political risk involving its key Grasberg mine in Indonesia, but it’s also benefited from a strike at Chile’s massive Escondida mine. That, in turn, spurred a sharp rally in copper futures (@HG) last week.
Overall in the name, calls outnumber puts by almost 3 to 1.
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