Bulls claim their profits in $FCX

Option traders are mining profits from upside positions in Freeport-McMoRan (FCX) today on two separate unusual option activity trades.

Market Rebellion’s Unusual Option Activity Service flagged bullish option activity in the name on two consecutive sessions back in January:

–On Mar. 23, 5,000 June $7 calls were purchased for $0.95 to $1.01 as part of a bullish spread above open interest of 4,431 contracts with shares at $6.43.
–On Mar. 27, 2,900 June $7 calls were also bought for $0.53 to $0.61 with shares at $5.63.

Those June $7 calls traded for as much as $2.76 today, at least 2.5 times their purchase prices. The stock rose as much as 72.82% in the same time frame, underscoring how options can far outperform their underlying shares.

Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.

FCX was up 4.39% to $9.75 today. The mining company has rallied recently as the metals and mining sector has gained investors’ attention with the dollar’s recent weakness.