Stocks quoted in this article:
Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) hit a fresh annual high of $38.90 earlier this afternoon, and was last seen just below that mark at $38.81. Not surprisingly, options activity has picked up, especially on the call side of the aisle, where 40,000 contracts are on the tape -- more than double the expected intraday amount. Short-term contracts are sought-after, as well, as evidenced by the 8.4% spike (to 25.7%) in FCX's 30-day at-the-money implied volatility.
Far and away the most active strike in the stock's options pits is the September 39 call, where over 11,200 contracts have traded -- most of which were bought to open at a volume-weighted average price (VWAP) of $1.41. Consequently, these bullish traders anticipate Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) will surmount $40.41 (strike plus VWAP) by September options expiration, with theoretically unlimited gains north of breakeven. On the other hand, the most the buyers have risked is the initial premium paid, should the equity be resting below the strike when the contracts expire.