FCX Strategy

Discussion in 'Stocks' started by miggidy, Oct 8, 2008.

  1. miggidy


    I believe that FCX's current price provides a great opportunity for selling some puts..

    The Jan 2010 put contract at the strike price of 40 (YPXMG.X) is at 14.90.

    For my account I am going to sell 4 of these puts, netting myself approx $6,000.

    If, in over 15 months, FCX is not above $40, I will be required to buy 400 shares at $40, costing a total of $16,000.

    $16,000 - $6,000 = $10,000

    $10,000 / 400 = $25/share

    If FCX would not be above 40, I would essentially have 400 shares at $25.

    I believe this is one of the best ways of playing the drastically low price of FCX. All constructive comments are wanted. College student trying to profit with these market conditions.
  2. These are naked puts you want to sell?
    Do you have enough cash to buy the underlying stock?

    I would advise against selling naked puts to begin with, however if you must.

    You never want to sell a put option when the stock is already lower then the strike price. (fcx = 38,50 right now)
  3. miggidy


    Yes I have the money to purchase these if they get called.

    And yes naked puts, I have 15 months for the stock to retrace, but looks like I only needed today for that to happen.
  4. FCX is a great company and a good stock. Its dirt cheap. But it was cheap at $55,-- also.

    I think the possibility that it will go to $ 27,-- (40,-- -/- your premium) is smaller then it will go higher.

    Selling naked puts is one of the more risky plays , but you can make a lot of money.
  5. miggidy


    I would gladly own 400 shares of FCX at $25 anyday. Especially a year from now if I did get called.