What’s cooking in copper?

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Copper pipes of different diameter cut. 3d render.

Just two days ago, a large bullish call roll appeared in copper giant Freeport McMoRan (FCX). The red metal’s gone straight up since the options trade appeared.

Copper futures (@HG) rose about 1.8 percent today, their fourth consecutive positive day. Press reports attributed the move to a strike at Chile’s key Escondida mine, although there seem to be other factors at play as well. First, copper traditionally rises in a strong economy because it’s used in things like wires, pipes and machinery. Second, the chart is showing signs of breaking out of its tight range over the last two months. Third, the U.S. dollar (@DX) is starting to go down and the Australian dollar (@AD) is starting to go up. Historically, copper has followed the Aussie.

So far, not many people have even noticed the move. We just wanted to follow up the bullish trade in FCX and keep an eye on an area of the market that’s been largely forgotten over the last year or two.

Copper futures (@HG), with moving averages and potential range breakout.
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David Russell is VP of Content Strategy at TradeStation. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them appraised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.