Options Flag in Freeport-McMoRan (FCX)

Posted in Options 
September 19th, 2009

With $1,000 gold and with some speculating on who might be acquired in the space, it may be of little surprise that Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) was so active in stock options Friday.  But the common share trading volume was ‘only’ 13.8 million shares compared to an average daily volume of over 17 million shares; and the stock was down almost 2% at $70.14 on the day.  But a review in the options activity showed that over 90,000 options contracts on Friday.  That is not normal.  Much of his was at the $70 PUT and CALL strikes, so they were close-out trades.  But in OCT-2009 we saw twice the open interst trade in the $65 and $75 CALL strikes trade.  The $65′s had over 18,000 contracts trade and the $75′s had over 24,500 contracts trade.  Even the other strikes for various OCT-2009 CALLS had over 10,000 contracts trade hands. There were no other unusual options red flags out beyond October.  With a huge market cap nearing $30 billion, you have to wonder who or what would make this so interesting.  Our guess is that much of this was a roll of some sort or was based more on a metals-sector trade than anything else.  -JON OGG

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