Bulls double money in $FCX

Freeport-McMoRan has rebounded sharply this month, yielding significant gains on upside option positions.

On Jan. 18, Investitute’s tracking systems detected the purchase of 12,000 March $13 calls in one print for $0.54 with shares at $12.42. This was clearly a new position, as volume was far above the strike’s open interest of 3,040 contracts before the trade occurred. Investitute co-founder Pete Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded for as much as $1.12 today, more than double their purchase price. The stock rose 11.43% in the same time period, 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 was up 1.99% to $13.35 today. Citigroup upgraded the mining and energy company to “buy” from “neutral” with a $16 price target yesterday morning.