$FCX call prices rocket fivefold

Option traders have been piling into Freeport-McMoRan all month, and traders reaped huge rewards today.

On Dec. 6, Investitute’s tracking systems found that 2,400 Weekly $13.50 calls expiring tomorrow were purchased for $1.09 with shares at $14.38. This was clearly fresh buying, as open interest in the strike was only 97 contracts before the activity appeared.

Those calls traded for $5.68 in the last hour of today’s session, more than 5 times their original purchase price. The stock surged 33.5 percent in the same time frame, a big move but one that still pales in comparison to that of its options. Investitute co-founder Pete Najarian, who has been bullish on Freeport for months, cited heavy buying in several call spreads today on CNBC’s “Halftime Report.”

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 3.1 percent today to close at $19.27, only 3 cents off a 52-week high reached just minutes earlier. The miner has rallied along with copper and precious metals as demand has risen and the dollar has weakened.