Calls keep mining profits in $FCX

Freeport-McMoRan continued to rip higher today, handing large returns on bullish option positions.

On Dec. 8, Investitute’s market scanners identified the purchase of 10,950 February $16 calls for $0.57 as part of a bullish roll with shares at $14.90. This was clearly a new position, as volume was far above the strike’s open interest of 4,554 contracts.

Those calls ended today at $1.63, nearly 3 times their purchase price. The stock rose 13.9 percent in the same time frame, illustrating the kind of leverage that can be achieved through options. It was the third winning trade in Freeport-McMoRan posted on Investitute in the last four sessions.

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 jumped 4.88 percent to $16.98 today. The mining and energy company has rallied sharply in recent weeks as the price of copper has risen.