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Good Time To Sell Puts On Freeport-McMoran Copper & Gold Inc. (FCX) For Income

|Includes:Freeport-McMoRan Inc. (FCX)

On 4/17/13 I wrote an article explaining how Freeport-McMoran Copper & Gold Inc. (NYSE:FCX) was trading at long-term support. Check out the article here seekingalpha.com/instablog/6143431-robert-edwards/1767981-freeport-mcmoran-copper-gold-inc-fcx-is-trading-at-long-term-support That article was written just prior to earnings and sure enough, FCX bottomed just below 28 and is now trading solidly above 30. I have since sold out of the shares that I bought prior to earnings since copper has not bounced as well as the stock has. It is still quite possible that copper breaks down below major support at $3 and trades down to $2.75. However, with the strength seen in FCX recently, it would appear that FCX will likely hold at the recent low of 27.50 to 28, even if the metal trades lower in the near future.

Therefore I see an opportunity to do some naked short selling in this stock. I would favor selling 28 and 29 dollar puts for income, and would choose puts that have 1 to 2 weeks of time value, to take advantage of time decay that accelerates into expiration. If FCX would dip to the point the options go off "in-the-money" and I am exercised and own the shares, I will then immediately sell calls with the same 1-2 weeks of time value until the stock rallies enough to call the shares away. I don't see FCX booming anytime soon, nor do I see it selling off much. Thus, it appears to be a good time to consider selling puts for income on this very fine, well managed company. If we slip down a bit and one gets exercised, one might even pick up a dividend payment if the timing is just right.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: Although I am not long FCX stock, I am selling puts which is a neutral to bullish strategy.

Stocks: FCX