Freeport-McMoRan Inc. (FCX) Bounce Sparks a Rush of Bullish Betting

Freeport-McMoRan Inc's (FCX) February 20 call is being bought to open today

Jan 16, 2015 at 2:23 PM
facebook twitter linkedin


It's been a volatile week of trading for Freeport-McMoRan Inc (NYSE:FCX). On Wednesday, the shares plunged nearly 11% amid a sharp drop in copper, and this afternoon, the equity is up 4.1% to trade at $19.09. Although FCX's 14-day Relative Strength Index (RSI) of 24 suggests a near-term bounce may have been in the cards, today's gains aren't enough to sate options traders, who are calling for a move north of the round-number $20 mark over the next five weeks.

30-Minute Chart of FCX Since Monday, Jan 12

Taking a quick step back, calls are trading at 1.7 times what's typically seen at this point in the day, with a healthy portion of the day's action centered on the February 20 strike. All signs point to buy-to-open activity, as traders bet on the stock to be sitting north of $20 at the close on Friday, Feb. 20, which is when the options expire.

With FCX's fourth-quarter earnings report tentatively slated for release at the end of this month, these short-term speculators are willing to pay up for their bullish bets. Not only does the equity's Schaeffer's Volatility Index (SVI) of 55% rank in the 96th annual percentile, but its 30-day at-the-money implied volatility of 54.3% stands above 99% of similar readings taken in the past year, and earlier touched a 12-month high of 57.5%.

Outside of the options pits, optimism is high toward the long-term laggard. Of the 15 analysts covering the shares, 12 have doled out a "buy" or "strong buy" recommendation, with not a single "sell" to be found. Plus, the consensus 12-month price target of $32.31 stands at a 69% premium to the stock's current perch. Should Freeport-McMoRan Inc (NYSE:FCX) resume its withstanding trajectory -- the shares have shed more than half their value since hitting an annual high of $39.32 on July 10 -- a round of downgrades and/or price-target cuts could translate into a fresh wave of selling pressure.

 

Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 

 


 


 
Special Offers from Schaeffer's Trading Partners