Call Traders Should Keep Tabs on This Mining Stock

The stock looks ripe for a short squeeze, as well

May 24, 2024 at 1:45 PM
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Subscribers to Schaeffer's Weekend Trader options recommendation service received this FCX commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

Freeport-McMoRan Inc (NYSE:FCX) stock hit multi-year highs last week, after a bullish cup-and-handle breakout above $51.40-$51.70. This area is 1.5 times multiple 2023 closing lows, as well as its June 2022 peak, and provided pressure since early April. The equity is also trading above a trendline connecting peaks from 2009, 2011, and 2022 on the monthly chart, and on Friday touched its 10-day moving average, from where it rallied after a breakout in March.

FCX Chart April 032024

The security also looks ripe for a short squeeze. Short interest is currently at levels not seen since January 2023, after a 40% increase since the start of the year. There’s also room for potential upgrades, as shares are up over 50% in the last 12 months and have so far doubled the S&P 500 Index's (SPX) year-to-date return.
 
It’s worth noting that implied volatility (IV) for the shares is in line with 63-day historical volatility (HV). Our recommended July 50 call has a leverage ratio of 7.00, and will double on a 13.7% pop in the underlying security.

 

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