Freeport-McMoRan Inc. (FCX) is a natural resources company based in the U.S. with assets around the world. The company’s stock is currently trading around $23.58 in a 52 week range of $20.94-$39.32. The stock has been massively underperforming the market this year with shares falling over 37% year to date. Traders are expecting this weakness in FCX to continue through the beginning of the New Year as we have seen some very bearish options activity in FCX during today’s session.
Earlier today a trader bought 3,223 FCX Feb 20 puts for $0.43. Nearly 12,000 contracts have now traded on that line and FCX is lower from where it was when the puts were bought. This is a very bearish trade and has a breakeven below the stocks 52 week low. FCX is also trading below the Ichimoku Cloud meaning that it is still in technically bearish territory. With a weak chart and large blocks of bearish positions coming across the tape I think that FCX sets up well for a short here.
Trade: I bought the FCX Feb 20 puts for $0.42
Risk: $42 per 1 lot
Breakeven: $19.58
Regards,
Andrew Keene
KeeneOnTheMarket.com
