I opened a small leveraged position on FCX.
music selection: “Play To Kill’ — Primal Fear
I’m looking for plays that benefit from the push for a zero carbon future. I prefer the “picks and shovels” plays. To that end, I find there is a strong consensus from government agencies and private prognosticators in the commodities space that mass electrification will require an enormous amount of new copper. In recent months, Copper has moved up about 50% in price after languishing around $3 since the 2008 financial crisis. Demand is expected to soar by a minimum of 500%. Buying a copper miner is a way to get leveraged exposure to the metal. I also like Nickel plays which is essential to battery technology. For that I like BBL but the ADR has no options so I’m going with FCX.
Freeport McMoran (FCX) is a miner with a lot of copper exposure plus some oil and gas assets that are being wound down. Their mines are productive, have about 40 years of useful life left, and are in friendly jurisdictions in North/South America and Australia. With shares trading around 36 dollars, I bought one long dated call option (20JAN2023) at the 20 strike for 16.75 a share. I have 1,675 dollars at risk in the trade, making this a small position size for me. Since I have roughly double leverage with the options and FCX is a leveraged play on copper, gains could be explosive while downside is capped at about 1% of my main taxable trading portfolio.
Devour your prey raptors!