Freeport-McMoRan Inc (FCX) Sees a Rare Burst of Call Volume

Freeport-McMoRan Inc (NYSE:FCX) calls are hot today, as a weak U.S. dollar boosts copper stocks

Jun 15, 2016 at 2:40 PM
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Copper stocks are getting a boost today, as the U.S. dollar continues to decline following the Federal Reserve's decision to leave interest rates unchanged. Miner Freeport-McMoRan Inc (NYSE:FCX), for example, has surged 8.9% to $11.12. Options traders are responding in kind to FCX stock, with calls crossing the tape at nearly two times the average intraday pace.

Drilling down, FCX's June 11 call has seen the most action, with more than 8,300 contracts on the tape at last check. It looks as if some of this activity is of the buy-to-open kind, meaning speculative players expect FCX to extend today's rally through week's end, when front-month options expire.

More broadly speaking, it's been put buyers who have been busy in FCX's options pits in recent months. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 50-day put/call volume ratio of 0.85 ranks in the bearishly skewed 77th annual percentile.

Elsewhere, FCX sports a Schaeffer's put/call open interest ratio (SOIR) of 1.61. Not only does this show that puts outweigh calls among options expiring in three months or less, but it ranks in the 90th annual percentile. In other words, short-term speculators have rarely been as put-heavy toward the stock as they are now.

This skepticism is seen outside of the options pits, as well. Short interest climbed 7% in the most recent reporting period, and now accounts for a lofty 11.3% of FCX's available float. Plus, 12 of the 15 analysts covering the shares maintain a "hold" or worse recommendation.

What's surprising is that these low expectations surround a stock that's more than tripled since hitting a 15-year low of $3.52 in late January. However, should Freeport-McMoRan Inc (NYSE:FCX) extend its run higher, an unwinding of skepticism could create a fresh burst of buying power for the shares.

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