Courtesy of Scott Brown, Sabrient Systems and Gradient Analytics
When I look into your eyes
It’s like watching the night sky
Or a beautiful sunrise
There’s so much they hold
And just like them old stars
I see that you’ve come so far
To be right where you are
How old is your soul?
I won’t give up on us
Even if the skies get rough
I’m giving you all my love
I’m still looking up
And when you’re needing your space
To do some navigating
I’ll be here patiently waiting
To see what you find
Freeport-McMoRan Copper and Gold, Inc. (FCX) was originally added for long exposure on March 19, 2012, and the put option rolled to Aug $40 on May 18, 2012. Timing is the key question when it comes to owning FCX because the company should benefit more than the underlying commodity when Copper and Gold rise. “There’s so much they hold,” and the CEO recently indicated that while there is a slowdown in China, they haven’t see it as much in Copper as other areas. Our strategy has been to add 1/2 of the shares we would like to own on March 19 and sell option premium to enter the second 1/2 shares at a lower net price. The current Aug $40 put expires on Friday August 18, 2012 and “I’m still looking up” at the $40 strike. I am recommending rolling the put to Nov $40 for an additional $0.85 in premium. In other words, we sold the Aug $40 on May 18 for $8.20 and can buy to close that position today for $4.60 ($3.60 profit) and sell the Nov $40 put for $5.45.
There are many reasons to “be here patiently waiting, to see what (they) find.” FCX is the world’s largest low-cost producer of Molybdenum, and it is ramping up to produce 20 million pounds in 2013. FCX also expects Copper production in North and South America to reach $3.5 billion pounds by 2016. Once China consumes the above-ground excess and gets a handle on the slowdown, Copper should move higher in price and reward shareholders of FCX. “We won’t give up” and believe that FCX provides the Dark Horse Traders’ Hedge with the proper exposure…
