Weekend Trader Series
May 19, 2024
Open Positions Update
- Close the General Electric (GE) July 19, 2024, 160-strike call on Monday, May 20. Close the position at a limit price within the range of the current market price when you place the order.
The following is this week's recommendation:
Freeport-McMoRan (FCX)Place a limit order to buy the Freeport-McMoRan (FCX) July 19, 2024 50-strike call at a limit price within range of the current market asked price when you place your order. At the close on Friday, May 17, this option was offered at $5.90. FCX closed at $54.23 on Friday, May 17.Do not attempt to enter this position after Monday's close.Please use the following guidelines to manage the position:- Exit the position if the option is at a 100% gain from your entry price.
- If the option has not reached its target profit by 3:00 p.m. Eastern time on Monday, June 10, close the position.
- If there is a change to the above closeout parameters, we will notify you in your regular Sunday evening communication.
Freeport-McMoRan (FCX) stock hit multi-year highs last week, after a bullish cup-and-handle breakout above $51.40-$51.70. This area is 1.5 times multiple 2023 closing lows, as well as its June 2022 peak, and provided pressure since early April. The equity is also trading above a trendline connecting peaks from 2009, 2011, and 2022 on the monthly chart, and on Friday touched its 10-day moving average, from where it rallied after a breakout in March.
The security also looks ripe for a short squeeze. Short interest is currently at levels not seen since January 2023, after a 40% increase since the start of the year. There’s also room for potential upgrades, as shares are up over 50% in the last 12 months and have so far doubled the S&P 500 Index's (SPX) year-to-date return.
It’s worth noting that implied volatility (IV) for the shares is in line with 63-day historical volatility (HV). Our recommended July 50 call has a leverage ratio of 7.00, and will double on a 13.7% pop in the underlying security.
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