Buy Call FCX

September 21, 2023
Sell your FCX January 44 Calls

The market is under pressure again today following the Federal Reserve event. We are going to take advantage of this weakness to buy the stock that has attracted the steadiest bullish option activity, Li Auto (LI), while selling two positions (FCX/SHOP) that are not working. Let’s dive in.

FCX has not worked as the deteriorating market conditions have weighed on the stock. For that reason, and the fact that we have commodity exposure via our XLE and CCJ positions that are working better, let’s sell FCX.

To execute this trade you need to:
Sell to Close the FCX January 44 Calls.

July 25, 2023
Buy the Freeport-McMoRan (FCX) January 44 Calls (exp. 1/19/2024) for $5.30 or less.

In the last week, commodity plays have come alive. This is a positive for our XLE position, which we just sold for an initial profit of 20%.

And while that XLE partial sale was “mechanical” as we typically take profits at that approximate level, the other reason I wanted to sell a piece of that position was so that I could then add another commodity play. Which brings me to FCX …

FCX, much like its commodity peers such as CLF/NUE/RIO/SCCO are all breaking out to recent highs today, and are attracting bullish option activity looking for a continued move higher. Here are just a few of the FCX call buys today:

Buyer of 3,000 Freeport McMoRan (FCX) August 48 Calls for $0.43 – Stock at 44

Buyer of 4,000 Freeport McMoRan (FCX) November 50 Calls for $1.60 – Stock at 44

If the commodity stocks are going to continue to move higher, I want to be in FCX, which is a leader in the group, and has attracted the most aggressive call buying in the sector in the last week.

To execute this trade you need to:
Buy to Open the FCX January 44 Calls

The most you can lose on this trade is the premium paid, or $530 per call purchased.

The risks I see in this trade are largely market and sector related. And taking the sector risk a step further, copper/commodity stocks can get red hot as well as ice cold very quickly … so there is risk.

That being said, to pay $5.30 for a call with six months until its expiration in a sector that is showing real signs of life and has attracted aggressive call buying activity is a risk I’m willing to take.