Range-bound strategy in Freeport

optionMONSTER

A large trader is looking for shares of Freeport-McMoRan to remain range-bound in the long term.

optionMONSTER systems show detected the sale of 25,000 January 2016 42 calls for $2.83 late yesterday, just below the listed bid price at the time. This is clearly a new position, as the strike's previous open interest was just 1,168 contracts.

Less than 2 minutes later, a print of 1,025,000 shares of FCX was bought for $38.8451. Given the delta of the calls, the overall position is a directionally neutral play that is looking for shares to remain range-bound and/or for volatility to be lower than that implied by the price of the options. (See our Education section)

FCX fell 0.85 percent yesterday to $38.50. The mining and energy company was below $34 a month ago but reached a 52-week high of $39.32 late last week.


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