Buy Alert: March 20, 2015

Buy Alert:  March 20, 2015

 

Option Strategy:

Buy Freeport McMoran (FCX) May 15, 2015 $19.00 calls for $1.25 or better.

 

Commodity Outlook: Metals

With this month’s Federal Reserve meeting out of the way, now’s the time to take another look at the metals space.

In case you missed it, Wednesday’s FOMC meeting was rather bullish. Fed Chairman Janet Yellen revealed that interest rates would likely rise soon, but at a much slower pace than was previously expected.

In other words, despite much worrying to the contrary, the Fed is still in no hurry to drastically raise interest rates. If incoming economic data remains weak, they’ll adjust their interest rate plan accordingly.

Investors are sending oversold metals like gold, silver, and copper higher in response to the Fed news.

Here’s a company that has the potential to rebound strongly on rising metal prices…

 

Resource Company: Freeport McMoran (FCX)

As you may know, FCX is a global leader in copper and gold mining. The $18 billion market cap company has operations in North and South America, Africa, and Indonesia.

But since metals prices have been in the doldrums, FCX shares recently dropped to 5-year lows near $18 a share.

Without question, it’s been a brutal downturn…

But now that investors are adjusting to new interest rate expectations, there’s a growing chance FCX is met with strong buying in coming weeks.

And the best part is, we can enter a bullish trade in the name with very limited risk right now.

Here’s what I suggest you do…

Buy the FCX May 15, 2015 $19.00 calls for $1.25 or better.

The current bid/ask spread for this contract is $1.12/$1.13.

Do not pay more than $1.25!

Our official entry price for performance tracking is $1.13. Your price may be higher or lower.

Exit Strategy:

As you can see, FCX is testing the 52-week low set in January, which presents us with a potential “double bottom” pattern. There’s a very good chance the stock bottoms in this area and rallies higher into mid-2015.

Remember, we want FCX to trade higher. Our first profit target is $22 while our second target is at $23.50.

The risk control price for this trade is $15.90. If FCX trades below that level, conservative investors should consider closing this trade to preserve capital.

 

Category: Commodity Trading