Option Bulls Busy as Freeport-McMoRan Inc (FCX) Eyes 2016 Milestone

Freeport-McMoRan Inc (FCX) is one of several mining stocks burning up the charts

by Alex Eppstein

Published on Apr 13, 2016 at 3:01 PM

Freeport-McMoRan Inc (NYSE:FCX) is burning a path higher, as mining stocks rally on upbeat Chinese export data that suggests demand for commodities could rise. Also sparking sector gains are ongoing developments in a Brazilian corruption scandal, which could result in President Dilma Rousseff's impeachment. With FCX 5.6% higher at $11.01, options traders are making noise.

At last check, FCX call options are being exchanged at 1.7 times the usual intraday rate. The two most active strikes are the April 10.50 and 11 calls, where data suggests some buy-to-open activity is transpiring. If this is the case, the buyers think the stock will extend its momentum through the end of this week, when the front-month options expire.

This signals quite the reversal for FCX options traders. During the past two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open 1.26 puts for every call. The corresponding put/call volume ratio rests just 4 percentage points from an annual high.

Now may be an opportune time to purchase premium on short-term FCX options. The stock's Schaeffer's Volatility Scorecard (SVS) of 100 suggests the shares have tended to make outsized moves in the past 12 months, relative to what the options market has priced in.

Technically speaking, today's rally is the continuation of a 2016 trend higher for Freeport-McMoRan Inc (NYSE:FCX). Since panning a 15-year low of $3.52 in late January, the mining stock has more than tripled in value. As it currently stands, FCX is just an hour away from notching its highest settlement price of 2016.

Sign up now for Schaeffer's Market Recap to get all the day's big stock movers, must-know technical levels, and top economic stories straight to your inbox.


A Schaeffer's exclusive!

The Expert's Guide

Access your FREE trading earning announcements before it's too late!


 
 

Partnercenter


NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories


The Latest Investor's Guide to Precious Metals
Learn how to protect savings and maximize returns by investing in precious metals.
Patent Lawsuit Loss Sends AMRN Stock Spiraling
Amarin just lost a major U.S. patent lawsuit for its heart drug Vascepa
RH Stock Sinks Despite Earnings Beat
J.P. Morgan Securities and Cowen and Company cut their price targets
The Latest Investor's Guide to Precious Metals
Learn how to protect savings and maximize returns by investing in precious metals.