NEW DIRECTIONAL PUT PLAYS
Freeport McMoRan Copper & Gold - FCX - close 60.75 change -0.73 stop 64.25
Freeport-McMoRan Copper & Gold Inc. (FCX), through its wholly owned subsidiary, Phelps Dodge Corporation (Phelps Dodge) is a copper, gold and molybdenum mining company. Its portfolio of assets includes the Grasberg minerals district in Indonesia, which contains the single recoverable copper reserve and the single gold reserve; mining operations in North and South America, and the Tenke Fungurume minerals district in the Democratic Republic of Congo (DRC). FCX also operates Atlantic Copper, its wholly owned copper smelting and refining unit in Spain. As of December 31, 2009, consolidated recoverable proven and probable reserves totaled 104.2 billion pounds of copper, 37.2 million ounces of gold, 2.59 billion pounds of molybdenum, 270.4 million ounces of silver and 0.78 billion pounds of cobalt.
Target(s): 58.30, 55.20, 52.10
Key Support/Resistance Areas: 64.00, 58.00, 55.00, 52.00
Time Frame: 1 week
Why We Like It:
The chart of FCX is broken and I believe there is more downside to come in the near future. I've been looking for a good short entry in this stock over the last several days but the market swings have made it difficult to pinpoint an entry. Today's market action has me more confident and I suggest readers take advantage of the building momentum. The stock has broken a key support level near $65.00 and it just appears ready for a big capitulation push to the downside. I would like to see FCX retrace some of this afternoon's losses prior to entering short positions. $61.50 to $61.75 is an intraday resistance level and is the area I will use a trigger to buy July $55 PUTS. We'll keep a tight leash on the trade with a stop at $64.25 which is above today's highs. I view this trade as aggressive and quick so proper position should be used to limit risk. I am also choosing an out of the money option to limit capital at risk.
Suggested Position: Buy July $55.00 PUT if FCX trades up near $61.50, current ask $2.30, estimated ask at entry $2.00.
Annotated weekly chart:
Entry on June xx
Earnings 7/21/2010 (unconfirmed)
Average Daily Volume: 19 million
Listed on June 9, 2010