Buy Alert: July 17, 2013

Marcus Haber | July 17, 2013

Buy Alert: July 17, 2013

Trade Details

Buy Freeport-McMoRan Copper & Gold (FCX) September 2013 $29 Calls for $1.20 or better

Why?

FCX is one of the few large cap stocks still trading below its 200-day moving average. That’s because metals (and many other commodities) have been struggling this year. Freeport shares closely track the price of copper, which is also well below its 200-day and 50-day moving average.

While I do believe copper will rebound, that’s not the most compelling reason to get long FCX. You see, Freeport also has sizeable exposure to oil – which is one of the few commodities that has been performing well. Many investors seem to have forgotten the company purchased Plains Petroleum and McMoRan Exploration this year.

Once oil’s rise is taken into account, FCX could surprise the markets with better than expected numbers, perhaps as early as next week when earnings coming out. Still, we’re going to grab September calls to make sure we give this thesis some time to play out.