Freeport-McMoRan Copper & Gold Inc.
(NYSE:FCX) has been in hustle mode lately. During the past three months, the shares have tacked on 11.9% -- and cut their year-to-date deficit to a modest 2.8% -- to trade at $33.14. Not surprisingly, option traders have, for the most part
, turned their attention to the stock's long calls in recent months. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators have bought to open 267,024 calls throughout the previous 10 weeks, compared to 109,744 puts. The resultant 50-day call/put volume ratio of 2.43 ranks in the 69th percentile of its annual range, meaning long calls have been initiated over puts at an accelerated clip of late.
This trend toward calls is mirrored in the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.59. Not only does this show that call open interest outweighs put open interest among options slated to expire in the next three months, but it ranks lower than 83% of similar readings taken in the past year. Simply stated, short-term speculators are more call-heavy than usual.
Even more telling is the equity's front-month, gamma-weighted SOIR of 0.26, which implies that near-the-money call open interest almost quadruples put open interest among options expiring next Friday. Specifically, 15,486 contracts currently reside at FCX's September 33 call, while only 2,224 contracts make up open interest at the September 33 put.
The sentiment is sanguine outside of the options pits as well. Although short interest increased 12.8% over the last two reporting periods, it still accounts for a low 3.1% of the stock's available float. What's more, FCX has been rising in the midst of this selling pressure, which may point to underlying strength in the equity.
Elsewhere, Freeport-McMoRan Copper & Gold Inc. boasts 12 "buy" or better ratings, compared to four "holds" and not a single "sell." Additionally, Barclays jumped on the bullish brokerage wagon last Friday, and raised its outlook on the stock to "overweight" from "market weight." From a contrarian perspective, this leaves little room for further upgrades, even if the stock continues to advance.
This article by Karee Venema was originally published on Schaeffer's Investment Research.
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