Freeport-McMoRan Plummets 2% Amid Mine Disaster Fallout and Legal Scrutiny – What’s Next for Copper Giant?

Summary
• Freeport-McMoRan (FCX) trades at $41.93, down 1.99% from its $42.78 previous close
• Intraday range spans $40.50 (low) to $42.02 (high), reflecting volatile trading
• Legal investigations and production halts at Grasberg mine dominate headlines

Freeport-McMoRan’s shares face a sharp intraday decline as a tragic mine disaster, legal scrutiny, and production disruptions converge. The stock’s 2% drop underscores investor anxiety over operational risks and regulatory pressures. With copper prices surging on supply fears and FCX’s critical role in global supply chains, the market is recalibrating its stance on the copper giant’s near-term prospects.

Mine Disaster and Legal Scrutiny Drive FCX’s Sharp Decline
The immediate catalyst for FCX’s decline is the tragic September 8 mud rush at the Grasberg mine in Indonesia, which forced a production halt and triggered force majeure. This incident, coupled with ongoing legal investigations into securities fraud allegations, has amplified investor concerns. While Bank of America’s recent upgrade to 'Buy' initially buoyed sentiment, the market’s focus has shifted to the operational and regulatory risks. The mine accounts for 50% of Freeport’s reserves and 70% of its copper output, making its disruption a critical blow. Legal uncertainties further cloud the outlook, as multiple law firms investigate potential securities violations.

Copper Sector Under Pressure as FCX Leads Decline
The broader copper sector mirrors FCX’s weakness, with Southern Copper (SCCO) down 1.56%. Supply-side challenges persist as Teck Resources (TECK) and other miners face production cuts, tightening global copper supply. However, FCX’s decline is more pronounced due to its unique exposure to the Grasberg mine disaster and legal risks. While SCCO and peers benefit from elevated copper prices, FCX’s operational headwinds and regulatory scrutiny isolate it as a laggard in the sector.

Options Playbook: High-Leverage Puts and Calls for FCX’s Volatile Outlook
• MACD: -0.414 (Signal Line: -0.822, Histogram: 0.409) – Bearish divergence
• RSI: 44.4 (Neutral) – Slight oversold bias
• Bollinger Bands: Upper $47.91, Middle $41.22, Lower $34.52 – Price near lower band
• 200D MA: $39.94 (Below current price) – Potential support

FCX’s technicals suggest a short-term bearish bias, with key support at $39.94 (200D MA) and resistance at $41.22 (middle Bollinger Band). The RSI’s neutral reading and MACD divergence hint at continued downward pressure. For options, two contracts stand out:

• FCX20251017P41 (Put):
- Strike: $41.00
- Expiration: 2025-10-17
- IV: 53.88% (High volatility)
- Leverage Ratio: 73.39% (High)
- Delta: -0.3485 (Moderate bearish exposure)
- Theta: -0.0065 (Low time decay)
- Gamma: 0.1567 (High sensitivity to price moves)
- Turnover: 16,536 (High liquidity)
- Payoff (5% downside): $0.925 (max(0, 41.00 - 39.82))
- Why it stands out: High leverage and gamma make this put ideal for capitalizing on a short-term drop, with strong liquidity for entry/exit.

• FCX20251017C42 (Call):
- Strike: $42.00
- Expiration: 2025-10-17
- IV: 43.76% (Moderate volatility)
- Leverage Ratio: 60.62% (High)
- Delta: 0.4765 (Moderate bullish exposure)
- Theta: -0.2208 (High time decay)
- Gamma: 0.2078 (High sensitivity to price moves)
- Turnover: 35,862 (High liquidity)
- Payoff (5% downside): $0.00 (max(0, 39.82 - 42.00))
- Why it stands out: High gamma and liquidity make this call suitable for a rebound trade if FCX breaks above $42.00, though theta decay is a risk.

Trading Insight: Aggressive bears should prioritize FCX20251017P41 for a short-term play on continued weakness, while bulls may consider FCX20251017C42 if the stock breaks above $42.00. Monitor the 200D MA ($39.94) as a critical support level.

Backtest Freeport-McMoRan Stock Performance
I ran into an internal engine error while trying to finish the event-based back-test (“name ‘convert_statistics’ is not defined”). Most of the time this happens when the event-date file sent to the engine is empty – in this case the statistics module has no data to work with, so it throws the exception you saw.Why might the event-date list be empty?1. The raw OHLC data I used to identify “-2 % intraday plunges” may not contain the intraday Low column that the filter needs, so no dates were selected.2. The filter itself (Low ≤ previous-day Close × 0.98) might be a bit too strict if the data source uses adjusted prices or rounds intraday lows.How we can fix it:A. Re-extract FCX’s raw daily OHLC quotes (guaranteed to include Low) and re-run the event screening.  • Threshold remains “Low ≤ previous-close × 0.98”.B. If your real intent is more “large down day” than “exact intraday low”, we could instead use a simpler rule such as  • Close-to-Close return ≤ -2 %, or  • Open-to-Close intraday return ≤ -2 %. Those two variations usually generate a healthy sample size and avoid the Low-price field issue.C. If you have any specific dates you already know, we can feed them manually to the engine right away.Please let me know which way you’d like to proceed (A, B, or C), or if you’d prefer another custom threshold. Once I have your preference I’ll re-run the pipeline and deliver the full back-test results.

FCX at Crossroads: Legal Risks and Copper Demand to Dictate Next Moves
Freeport-McMoRan’s near-term trajectory hinges on two critical factors: the resolution of legal investigations and the pace of Grasberg mine recovery. While copper’s bullish supply-demand dynamics offer a long-term tailwind, the company’s operational and regulatory challenges could prolong volatility. Southern Copper (SCCO, -1.56%) remains a sector benchmark, but FCX’s unique risks isolate it as a high-conviction trade. Investors should watch for updates on Grasberg’s restart timeline and legal developments. Action Alert: Position for a rebound if FCX breaks above $42.00 or tighten stops below $39.94 (200D MA) to manage downside risk.