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) October 2022 $20-23 vertical BULL CALL spread at $2.50 or best
Opening Trade
9-27-2022
expiration date: October 21, 2022
Portfolio weighting: 10%
Number of Contracts = 40 contracts
With the Volatility Index (VIX) spiking here over $30, it’s time to add another long position.
I believe the fundamental argument for owning this company is so compelling that I am going to roll down my strike prices and try again! To lose money on this trade, (FCX) will have to drop 18% in four weeks, a really end-of-the-world type of move.
Finally, we got a decent entry point for a position in the midst of a long-term structural bull market.
If you can’t do options, buy the stock. My long-term target for (FCX) is $100, up from today’s $26. (FCX) is the world’s largest copper producer.
This is despite the fact that the United States Copper Fund ETF (CPER), in which (FCX) is a major holding, is up on the day.
Please remember that I told you earlier that each Tesla needs 200 pounds of copper, that Tesla sales could double to 2 million this year, and that they could sell 4 million if they could make them.
Therefore, I am buying the Freeport McMoRan (FCX) October 2022 $20-23 vertical BULL CALL spread at $2.50 or best.
Don’t pay for than $2.70 or you will be chasing.
Freeport McMoRan reported net income that more than doubled to an eye-popping $1.53 billion, or $1.04 a share, from $718 million, or 48 cents a share, in the year-ago period. Excluding nonrecurring items, adjusted earnings per share of $1.07 beat the FactSet consensus of 94 cents.
This is a bet that the (FCX) will not fall below $23.00 by the October 21 options expiration in 18 trading days.
If you are looking for other copper plays, please take a look at the United States Copper Fund (CPER), First Quantum Minerals Ltd. (FM.TO), Antofagasta (ANTO.L), and hang on. We are going much higher once the stock market bottoms.
I have a feeling that Freeport McMoRan is my new rich uncle, cutting me generous maintenance checks every month.
Here are the specific trades you need to execute this position:
Buy 40 October 2022 (FCX) $20 calls at………….………$7.00
Sell short 40 October 2022 (FCX) $23 calls at………....$4.50
Net Cost:………………………….…........……..………….….....$2.50
Potential Profit: $3.00 - $2.50 = $0.50
(40 X 100 X $0.50) = $2,000or 15.38% in 24 trading days.
If you are uncertain about 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.
