Buy Alert: December 1, 2015
Buy Alert: December 1, 2015
Option Strategy:
Buy Freeport McMoRan $FCX February 19, 2016 $9.00 calls for $0.80 or better.
Commodity Outlook: Copper
Let’s face it folks…
The past two weeks have been a bit dull in the commodity space. Not only did we just have a holiday shortened trading week, but the action was light and uneventful.
As it sits now, the monotonous trading action is carrying over into this week…
Crude is trading in a choppy sideways pattern near $41 a barrel. What’s more, gold and silver are stuck near $1,065 and $14 an ounce respectively.
Fact is, crude won’t likely make another substantial price move until investors hear the results of Friday’s OPEC meeting. As far as gold and silver go, traders may be twiddling their thumbs until the next FOMC meeting on December 16th.
As you know, the choppy sideways trading action in crude, gold, and silver does not benefit our style of option trading.
But there is an opportunity in copper…
As I write, the red metal is bouncing off very important technical support at $2 a pound. While the bullish potential in copper may be limited, any additional upside will likely send shares of the company below strongly higher.
Let’s get to it…
Resource Trade: Freeport McMoRan $FCX
Without question, it has been a tough year for $FCX. The miner is down a whopping 63% year-to-date thanks to crumbling copper prices.
But as you’ll see in the chart below, $FCX is currently trading at the 52-week low set in early August. Of course, this is a very important technical support level.
Given that fact, we have a great low risk/high reward trading opportunity in the name.
So here’s what we’ll do…
Buy the $FCX February 19, 2016 $9.00 calls for $0.80 or better.
The current bid/ask spread for this contract is $0.74/$0.76.
Do not pay more than $0.80!
Our official entry price for performance tracking is $0.76. Your price may be higher or lower.
Exit Strategy:
Remember, we want $FCX to trade higher. Our first profit target is $10.00 while our second target is at $12.00.
Once again, I am giving this trade very little room for error. Our risk control line is $7.55.
If $FCX trades below that level, conservative investors should consider closing this trade to preserve capital.
Until next time,
Justin Bennett
***Editor’s Note*** Please be sure to read the new free report posted to the member’s only section of the Commodity Trading Research website. This valuable report focuses on trade management techniques specifically designed for the style of trading we do in the Options Profit Pipeline.
Category: Commodity Trading
