Trade Alert - (FCX) April 2, 2024 - STOP LOSS - SELL
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) – STOP LOSS
SELL the Freeport McMoRan (FCX) April 2024 $48-$51 vertical BEAR PUT spread at $2.06 or best
Closing Trade
4-2-2024
expiration date: April 19, 2024
Portfolio weighting: 10%
Number of Contracts = 40 contracts
Copper, along with all other commodities, precious metals, and energy have been hotter than hot. So hot that I am being forced out early from my short position in (FCX). If there is any consolation, this loss is offset by our long position in (FCX) as well as all our other longs in commodities, precious metals, and energy.
Therefore, I am selling the Freeport McMoRan (FCX) April 2024 $48-$51 vertical BEAR PUT spread at $2.06 or best.
A severe short squeeze in copper is developing, leading to a massive price spike later in 2024. Copper prices could jump from the current $4.05 a pound for the CME contract to $10.00 by December, say industry insiders.
A Chinese economic recovery and soon-to-recover EV growth are the reasons. Copper is the only industrial metal up this year, some 6%.
I believe the fundamental argument for Freeport McMoRan is so compelling that I am going to dive in, even during this period of extreme volatility.
If you can’t do options, buy the stock. My long-term target for (FCX) is $100, up from today’s $44.11. (FCX) is the world’s largest copper producer.
Please remember that I told you earlier that each Tesla needs 200 pounds of copper, that Tesla sales could reach 2 million vehicles this year. The ten-year target is 20 million cars a year.
This was a bet that the (FCX) would not rise above $48.00 by the April 19 option expiration in 15 trading days.
Here are the specific trades you need to close out this position:
SELL 40 April 2024 (FCX) $51 puts at………….…...........……$3.50
Buy to cover short 40 April 2024 (FCX) $48 puts at…………$1.44
Net Proceeds:………………………….………..………….........….....$2.06
Loss: $2.50 - $2.06 = $0.44
(40 X 100 X $0.44) = $1,760
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.