Trade Alert - (FCX) April 25, 2022

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) May 2022 $37-$40 vertical BULL CALL spread at $1.95 or best

Opening Trade

4-25-2022

expiration date: May 20, 2022

Portfolio weighting: 10%

Number of Contracts = 40 contracts

Recession fears have greatly accelerated over the last four days, taking bonds up, and economically sensitive plays like Home Depot (HD), Caterpillar (CAT), JP Morgan (JPM), and Freeport McMoRan (FCX) down. Freeport alone has cratered an astonishing 22% in just the last three trading days.

Therefore, I am selling the Freeport McMoRan (FCX) May $37-$40 vertical BULL CALL spread at $1.95 or best.

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 beating the FactSet consensus of 94 cents.

Revenue grew 36.1% to $6.60 billion, above the FactSet consensus of $6.44 billion, as copper sales rose 24.1% to 1.02 billion recoverable pounds and as gold sales increased 58.5% to 409,000 recoverable ounces.

Average realized price per pound of copper rose 18.2% to $4.66 and the realized price per ounce of gold increased 12.1% to $1,920. The company cut its copper sales outlook for the second quarter to 1.040 billion pounds from 1.075 billion pounds, for the third quarter to 1.095 billion pounds from 1.125 billion pounds and for the fourth quarter to 1.095 billion pounds from 1.130 billion pounds.

This was a bet that (FCX) will not rise fall below $40.00 by the May 20 options expiration in 21 trading days.

Here are the specific trades you need to execute this position:

Sell 40 May 2022 (FCX) $37 calls at………….....……….………$4.30

Buy to cover short 40 May 2022 (FCX) $40 calls at…………$2.35

Net Proceeds:………………………........….………..………….….....$1.95

Loss: $2.50 - $1.95 = -$0.55

(40 X 100 X -$0.55) = $2,200 or -22.00%.

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.

Legal Disclaimer

There is a very high degree of risk involved in trading. Past results are not indicative of future returns. MadHedgeFundTrader.com and all individuals affiliated with this site assume no responsibilities for your trading and investment results. The indicators, strategies, columns, articles and all other features are for educational purposes only and should not be construed as investment advice. Information for futures trading observations are obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the trading observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein. Affiliates of MadHedgeFundTrader.com may have a position or effect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies.