Option traders mined significant gains in Freeport-McMoRan today for the second session in a row.
On Dec. 6, Investitute’s tracking systems found that 2,400 Weekly $13.50 calls were purchased for $1.09 to $1.13 with shares at $14.38. This was clearly fresh buying, as open interest in the strike was only 97 contracts before the trades occurred.
Today those calls sold for $2.79, more than 2.5 times their original purchase price. The stock rose 12.9 percent in the same time frame, showing how quickly options can far outpace gains in their underlying shares. This is the second winning Freeport trade posted on Investitute in as many days, with the calls cited yesterday now 5.5 times their entry price.
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 3.88 percent to $16.32 today. The mining and energy company, which has rallied recently with the price of copper and gold, was upgraded by Morgan Stanley on Tuesday evening.