How $FCX calls rocketed tenfold

Option traders pocketed gigantic profits on bullish positions in Freeport-McMoRan that expire this week.

On Dec. 12, Investitute’s tracking systems showed that 10,000 Weekly $16.50 calls expiring tomorrow were purchased for $0.34 and $0.35 as part of a bullish roll with shares of $15.66. This was clearly a new position, as open interest in the strike was a mere 25 contracts before the trade occurred.

Those calls sold for $3.31 this afternoon, almost 10 times their original purchase price. The stock rallied 26.6 percent in the same time period, a large move but nowhere near that of its options on a relative basis. It is the fourth winning trade in Freeport posted on Investitute in the last month.

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 1.9 percent to $19.88 today. The miner has rallied as the price of copper has soared with global demand.