Calls turn quick gains in $FCX

Option positions opened in Freeport-McMoRan (FCX) only a few days ago are already paying off for bullish traders.

On Dec. 6, Market Rebellion’s Unusual Activity Service found that 19,100 Weekly $12 calls expiring this Friday were bought for $0.10 to $0.12 with shares at $11.54. Volume was well above the strike’s previous open interest of 15,447 contracts, indicating that this was fresh buying.

Those calls traded for as much as $0.31 so far today, 3 times their initial purchase price. The stock rose 5.72% in the same time frame, illustrating the kind of leverage that can be achieved with options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

FCX is up 0.17% to $12.12 in midday trading. The mining and energy company has rallied with recent optimism toward U.S.-China trade negotiations.

(Disclosure: I am long FCX.)