FCX is the world’s largest publicly trader copper producer. The $40 billion market cap mining giant has rallied strongly over the past 2 weeks, but it is still trading just unchanged on the year, significantly lagging most other mining stocks.
FCX is approaching its 1 year highs near $38 after today’s 2.5% bounce :
The stock has encountered selling near $38 once again today. However, the overall strength in commodity prices (both copper and precious metals) over the past month is quite encouraging, though copper prices have generally lagged the precious metals in 2014. Copper is still in the $3.00 to $3.50 per pound price range that has prevailed in the metal since early 2013:
In one positive sign for FCX shares, the stock has been outperforming the commodity for the past year, as investors are showing more confidence in owning FCX rather than copper itself. While the correlation between FCX and copper is obvious on the weekly chart of FCX below, the stock is now near a new 18 month high, while copper prices are still more than 15% away from a similar milestone:
FCX’s outperformance vs. the underlying commodity is part of a broader outperformance by miners over the 6 months, relative to the moves in the underlying commodities.
With the stock near the $38 inflection point, it’s a bit surprising to see that implied volatility remains near 2 year lows, though that’s largely due to the low level of volatility in the broader market:
FCX is slated to report earnings on July 23rd. The August 38 calls are currently priced around $0.95, and the August 38 straddle is priced around $2.35. The straddle is probably a bit rich for a breakout or breakdown from here, though it could be more interesting closer to earnings if FCX remains near $38 in the coming weeks.