Stocks and Options » FCX

Freeport-McMoRan (FCX) – Rolled Out and Up Jan12 Call

Bill — Tue, 10 Jan 2012 19:57:31 +0000

Today, 1/10/12, I BTC 1 FCX Jan13 $40 Covered Call and STO 1 FCX Jan14 $42 Covered Call for a net deposit of $115.48 in an IRA account. My basis for these FCX shares is now $47.12, less dividends received. This transaction represents a simple return of about 2.39% and about 1.18% annualized on my prior basis.

This is one of those stocks that I am trading in this account to attempt to gather cash faster than my normal methods. In this case, I had hoped to gather option premiums while selling Covered Calls slightly out of the money with the goal of the stock being called away above my basis allowing me to repeat the cycle with the same or another stock. Except…in this case FCX did not cooperate and fell a little farther than I wanted…and now is recovering faster than I want. So I have had to roll the Call out and up again, although still at a strike price below my basis. I would normally have not been concerned with the stock price above my strike price except that tomorrow is the ex-dividend date for FCX and I did not want this one called away below my basis. If FCX behaves as in the past I might be able to roll these Calls in and down sometime before Jan14.

S&P continues a 12-month price target of $48 and a Buy rating on FCX. MarketEdge has a price opinion of $38.87 and now has a Neutral rating, up from an earlier Long. The 18 Yahoo Analysts have a 12-month price target of $53.17 with a recommendation to 1.8; on a scale where 1.0 is a Strong Buy and 5.0 is a Strong Sell.

Freeport-McMoRan (FCX) – Rolled Out and Up January 6, 2012 weekly Call

Bill — Fri, 06 Jan 2012 20:50:27 +0000

Today, 1/6/12, I BTC 3 FCX January 6, 2012 weekly $39 Covered Calls and STO 3 Jan12 monthly $39.50 Covered Calls for a net deposit of $245.47 in an IRA account. My basis for these FCX shares is now $36.34, excluding dividends received. These option transactions represent a simple return of about 2.20% and an annualized return of about 53.56% on my basis, if held maturity. In addition, I have increased my potential return by $150 if the stock should be called away from me.

FCX goes ex-dividend next week on January 11 and I would like to collect the dividends, even though I originally purchased these shares for the purpose of selling close to the money weekly Calls so they could be called away for a slight profit. FCX has been flirting around my prior $39 strike price so I decided to go ahead and roll out and up rather than take the chance that I might be called away.

S&P has a 12-month price target of $48 and continues its Buy recommendation. MarketEdge has a lower price opinion of $39.73 and has a Long opinion on FCX. The 18 Yahoo Analysts currently have a 12-month price target of $52.94 a recommendation of 1.8, down from a previous 2.1; on a scale where 1.0 is a Strong Buy and 5.0 is a Strong Sell.

As long as FCX continues to trade around $40, I believe I will continue to buy it, sell near the money Covered Calls and try to capture a dividend now and then. I seem to be creating better cash flow at this time with this method.

Freeport-McMoRan (FCX) – Bought Stock – Sold Dec 30 weekly Call

Bill — Tue, 27 Dec 2011 18:08:35 +0000

Today, 12/27/11, I bought 300 shares of FCX for a net cost of 38.19 per share and STO 3 FCX December 30, 2011 $38 Covered Calls for a net deposit of $184.73 in my taxable account. My basis for these FCX shares is now $37.57. This transaction represents a simple return of about .95% and an annualized return of about 115.46% if the stock is called away. If the option expires worthless this transaction represents a simple return of about 1.61% and an annualized return of about 196.22% with 3 days to expiration.

I continue to be enamored with these weekly Covered Call options, particularly with FCX. I sold the slightly in the money Calls, even though the strike is below my purchase price, because the stock was trending down this morning. I don’t know if FCX will continue trending down or not but I win in either case. If these FCX shares do not get called away this Friday I will be able once again to sell new Covered Calls either slightly in or slightly out of the money to gather additional premiums.

S&P continues a 12-month price target of $48 and a Buy rating on FCX. MarketEdge has a price opinion of $39.73 and now has a Long opinion. The 18 Yahoo Analysts have a 12-month price target of $52.94 and a recommendation of 1.8 on a scale where 1.0 is a Strong Buy and 5.0 is a Strong Sell.

Freeport-McMoRan (FCX) – Sold Jan12 Call

Bill — Mon, 19 Dec 2011 20:08:48 +0000

Today, 12/19/11, I sold 4 FCX Jan12 $41.50 Covered Calls in my Taxable Account and 2 IRA Accounts for a net deposit of $96.96. My basis for these FCX shares is now $38.30, 36.51 and 38.85 respectively. These transactions represents a simple return of about .68%, .60% and .57% with annualized returns of about 7.76%, 6.89%, and 6.48% respectively on my prior basis with 32 days to expiration. If called away, which is my goal; I will realize a total net profit of about $1,405.44 across the three accounts.

As I have noted before, I have made similar trades on FCX recently, some of which were assigned as desired, while some were not which allowed me to sell new options. In this case, the Calls I sold on these FCX shares expired last week allowing me to sell new Covered Calls on them. I would have preferred selling the weekly Covered Calls as in the past but FCX is down enough that I could not get a decent premium at my desired strike price.

S&P continues a 12-month price target of $48 and a Buy recommendation. MarketEdge has a lower price opinion of $39.73 with a Long opinion. The 18 Yahoo Analysts currently have a 12-month price target of $52.94, up slightly from $51.94 last week and continue a recommendation of 1.8; on a scale where 1.0 is a Strong Buy and 5.0 is a Strong Sell.

At the risk of repeating myself, I actually like FCX and would like to own more of it. However, I am using these shares as a trading vehicle in an attempt to generate cash flow more quickly. Even as I make those comments, I realize that I in fact own more of it.

Freeport-McMoRan (FCX) – Sold Dec11 Call

Bill — Mon, 12 Dec 2011 18:15:19 +0000

Today, 12/12/11, I sold 1 FCX Dec11 $40 Covered Call for a net deposit of $20.24 in my taxable account. My basis for these FCX shares is now $39.38. This transaction represents a simple return of about .51% and an annualized return of about 46.57% on my prior basis with 4 days to expiration.

My December 9, 2011 $40 Covered Calls on these shares expired worthless last Friday making this the second time I have sold a weekly Covered Call on them. Actually, it is the regular December monthly expiration but the idea is the same.

I continue to sell weekly Covered Calls on FCX with the belief that I will gather cash faster than my normal methods. Normally I like to hold FCX, collect the dividends and sell Covered Calls on it. In this case, I hope to gather option premiums while selling Covered Calls slightly in or out of the money with the goal of the stock being called away allowing me to repeat the cycle with the same or another stock. This has not worked out quite as I thought because FCX retreated from my target strike price and I still own the shares. On the other hand, FCX is volatile enough that I am still making money selling Covered Calls on it. On occasion, I have even collected some unexpected dividends because I held the stock through the ex-dividend date.

S&P continues a 12-month price target of $48 with a Buy recommendation. MarketEdge currently has a price opinion of $39.73 and has upgraded the stock to a Long recommendation. The 18 Yahoo Analysts have a 12-month price target of $52.83 and a recommendation of 1.8 on a scale where 1.0 is a Strong Buy and 5.0 is a Strong Sell.

I actually like FCX and would like to own more of it. However, I am using these shares as a trading vehicle in an attempt to generate cash flow more quickly. Even as I make those comments, I realize that I in fact own more of it.