Buy Alert: December 31, 2012

Marcus Haber | December 31, 2012

Buy Alert: December 31, 2012

Trade Details

Buy Freeport-McMoRan (FCX) February 2013 $34 Calls for $1.50 or better

Why?

FCX is the reason why we had a huge win with MMR – so now let’s see if the stock can provide us with another winner. This time, we’ll be buying calls on the company itself.

Here’s the deal…

FCX shares dropped substantially on news of the MMR buyout. It’s a result of the large cash outlay required to make the deal, as well as some concern by investors over the risk of entering the energy business.

However, Freeport is a well-run company in excellent financial health. And, energy can be a very lucrative, high margin business. Plus, if MMR hits the mother lode with the Davy Jones well as expected, those massive resources will now be a part of FCX’s balance sheet.

Moreover, FCX is trading well below its 50-day and 200-day moving averages. It’s highly probable the stock will climb back towards those key technical levels in the near future.

We’re going to give ourselves a little extra time and grab the February calls.