10:15am (EST)

Freeport-McMoRan (FCX, $51.81, up $2.29) has been on a major roll since March and is up another 5% this morning. The stock is a frequent guest here in the blog and we have made some good trades in the past playing its options. I made a Watch List for the sector in May of 2008, a month after we launched the blog, when the stock was at $117. The original blog can be read here and it is a good review on setting up Watch Lists.

We went long Freeport-McMoran in early March with the March 35 call options and made a pretty decent return. The real trade was to go out to the June 35 (FPAFG, $17.10, up $2.35) back then. They were probably going for under $2 and THAT would have been a monster of a trade.

Of course, those options are expensive but for option players looking for some more upside, the June 55 calls (FCXFK, $2.10, up $0.70) and June 60 calls (FCXFL, $0.80, up $0.47) are active. The July 60 calls (FCXGL, $1.85, up $0.55) could also do well and you may be able to get better entry prices today.

The chart for Freeport is showing more upside at the moment but it is hard to trust a stock that fell from $70 in September to under $20 in 2 months. However, the decline was steep so the retracement could get interesting. The only thing working against you is the three-day weekend coming up and if these options do well for the rest of the week, I’d look to close them out Friday.

Rick Rouse
Rick@OptionsMentoring.com