When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline.
Trade Alert - (FCX) – BUY
Buy the Freeport McMoRan (FCX) February $21-$23 vertical bull call spread at $1.70 or best
Opening Trade
2-1-2021
expiration date: February 19, 2021
Portfolio weighting: 10%
Number of Contracts = 57 contracts
If you can’t do options, buy the stock on the next big dip. I expect Freeport McMoRan to make it to $50 in the coming years.
You can’t have a synchronized global economic recovery without a bull market in commodities. Freeport McMoRan is the world’s largest producer of copper and a long time Mad Hedge customer.
The stock has been on a tear since March on the back of record Chinese buying of copper ahead of their economic recovery, which started seven months ago. I believe this move will continue for years. The old high for the stock in the last cycle was $50.
In addition, with a 61.5% implied volatility in the options market compared to 22% for the S&P 500, this is a very attractive spread to add with only a 13-trading day view to the February 13 options expiration.
I am therefore buying the Freeport McMoRan February $21-$23 in-the-money vertical Bull Call spread at $1.70 or best.
Don’t pay more than $1.85 or you’ll be chasing.
DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
Simply enter your limit order, wait five minutes, and if you don’t get done, cancel your order and increase your bid by 5 cents with a second order.
This is a bet that Freeport McMoRan will not trade below $23 by the February 19 option expiration day in 13 trading days.
Here are the specific trades you need to execute this position:
Buy 57 February 2021 (FCX) $21 calls at……….….………$7.00
Sell short 57 February 2021 (FCX) $23 calls at………....$5.30
Net Cost:………..…….........…..............……..………….….....$1.70
Potential Profit: $2.00 - $1.70 = $0.30
(57 X 100 X $0.30) = $1,710 or 17.64% in 13 trading days.
If you are uncertain on how to execute an options spread, please watch my training video by clicking here.
The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the market to come to you. The difference between the bid and the offer on these deep in-the-money spread trades can be enormous.
Don’t execute the legs individually or you will end up losing much of your profit. Spread pricing can be very volatile on expiration months farther out.
Keep in mind that these are ballpark prices at best. After the alerts go out, prices can be all over the map.
