Bulls mine huge profits in Freeport

Upside option positions surged as Freeport-McMoRan rallied today.

On July 12, Investitute co-founder Jon Najarian noted that 7,400 September $14 calls were purchased mostly for $0.30 with shares at $12.44. Open interest in the strike was only 2,088 contracts before the activity appeared, showing that this was fresh buying.

Today those calls traded up to $1.44, a gain of 380 percent. The stock rose 20.3 percent in the same time frame, illustrating the kind of leverage that can be achieved through options.

Long calls lock in the price where the 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 jumped 14.74 percent to $14.87 today. The metal and energy producer missed quarterly estimates but spiked higher with the price of copper, which is seeing strong demand and tight supplies.