Option traders are mining for major gains in upside positions in Freeport-McMoRan (FCX) today.
On May 31, Market Rebellion’s Unusual Activity Service found that 10,500 August $37 calls were bought for $1.63 above the existing open interest of 3,792 contracts with shares at $34.02.
Those calls have traded for up to $3.90 today, a 139.26% return, while the stock rose 17.14% in the same time frame, showing how quickly options can far outpace gains in 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 last up 1.42% at $39.91.
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