Play FCX Calls

Gold Looking to Rally into Fed

By Bryan Bottarelli
Thursday, September 06, 2007 12:15 PM EDT
Thu, 6 Sep 2007 16:15:00 GMT

Dear Bottarelli Research Member,

I was investigating a new upside breakout formation in shares of Barrick Gold (ABX – NYSE) when I received a note from Charter Member L.S. that read, “Bryan, anything on your radar to play the up movement in gold, gold stocks?” So as you can tell, many investors are taking a new look at metals. And when you see today’s move in ABX, its’ clear that the market is pushing metal stocks (especially gold) higher in advance of a Fed rate cut.

ABX

So I’d like to get positioned to profit off any further upside moves leading into September’s Fed meeting, but instead of playing ABX, we have a better entry opportunity in Freeport-McMoRan Copper & Gold (FCX – NYSE).

FCX

As you can see, FCX just broke above its 50-day moving average — and now appears to consider this level a support point. This signals an upcoming move back to its recent high at $100.00, so let’s rise this upside using October calls. Here’s the play:

PLAY: Buy the FCX October 90 Calls (FCX JR) at or under $6.90, good for the day. Current bid/ask spread is $6.40 to $6.70. Place a protective stop limit at $4.10.

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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