Bulls score quick gains in $FCX

Option traders have more than doubled their money on multiple upside positions opened in Freeport-McMoRan (FCX) last week.

Our proprietary tracking systems detected bullish activity in the same strike on three consecutive sessions as shares fell to multi-year lows at the end. Co-founder Jon Najarian cited the unusual activity on CNBC’s “Halftime Report” as the trades began:

—Aug. 26, 5,100 September $9.50 calls were bought for $0.18 to $0.20 with shares at $8.83.
—Aug. 27, 2,400 September $9.50 calls were bought for $0.21 to $0.23 with shares at $8.98.
—Aug. 28, 4,000 September $9.50 calls bought for $0.13 to $0.23 with shares also at $8.98.

Those calls have traded up to $0.46 so far today, more than 2.5 times their initial purchase price. The stock rose 10.53% 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 1.51% to $186.17 approaching midday trading. The mining and energy company has rebounded in the last week off its lowest levels in more than three years on hopes of progress on the U.S.-China trade dispute.

(Disclosure: I am long FCX.)