Freeport McMoran Copper and Gold (FCX) 2/9/10 PriceWatch Alert Up To 31.44% Return

Posted: Tuesday, February 09, 2010 8:23 AM EDT
By: Market Intelligence Center Staff

Freeport McMoran Copper and Gold (NYSE: FCX) closed yesterday at $69.20. So far the stock has hit a 52-week low of $26.08 and 52-week high of $90.55. Freeport McMoran stock has been showing support around 66.95 and resistance in the 73.11 range. Technical indicators for the stock are Bearish and S&P gives FCX a positive 4 STAR (out of 5) buy rating. FCX appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at a May '10 65 covered call for a net debit in the $59.75 area. That is also the break even stock price for this trade. This covered call has a 102 day duration, provides 13.66% downside protection and an 8.79% assigned return rate for a 31.44% annualized return rate (comparison purposes only). A lower cost hedged play for this stock would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the FCX Jan '11 35 Call and selling the May '10 65 call for a $25.90 debit. The trade has a 102 day life and would provide 11.99% downside protection and a 15.83% assigned return rate for a 57.00% annualized return rate (for comparison purposes only). Freeport McMoran has a current annual dividend yield of 0.90%. [ATU-Seven Summits Research]