Freeport McMoran Copper and Gold (FCX) 11/20/09 PriceWatch Alert Technicals Showing Bullish

Posted: Friday, November 20, 2009 8:41 AM EDT
By: Market Intelligence Center Staff

Freeport McMoran Copper and Gold (NYSE: FCX) closed yesterday at $84.72. So far the stock has hit a 52-week low of $15.70 and 52-week high of $86.11. Freeport McMoran stock has been showing support around 81.41 and resistance in the 86.91 range. Technical indicators for the stock are Bullish 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 Jan '10 80 covered call (FHZ AP) for a net debit in the $75.72 area. That is also the break even stock price for this trade. This covered call has a 57 day duration, provides 10.62% downside protection and a 5.65% assigned return rate for a 36.20% 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 25 Call (OBQ AE) and selling the Jan '10 80 call (FHZ AP) for a $51.05 debit. The trade has a 57 day life and would provide 10.23% downside protection and a 7.74% assigned return rate for a 50.00% annualized return rate (for comparison purposes only). Freeport McMoran does not pay dividends at this time. [FBB-Seven Summits Research]