Freeport-McMoRan Plunges 2.7% Amid Copper Sector Turbulence: What’s Brewing in the Mining Giant’s Future?

Summary
• Freeport-McMoRan (FCX) tumbles 2.7% intraday to $58.325, breaking below its 52-week low of $27.66
• Sector news highlights Amazon’s Arizona copper project and potential Rio Tinto-Glencore merger
• Options chain surges with 272,000 contracts traded on the 1/23 expiration date

Freeport-McMoRan’s sharp intraday decline has ignited a firestorm of speculation, with copper sector dynamics and speculative options activity amplifying the volatility. The stock’s 58.82–57.7 range underscores a fragile technical foundation, while sector-wide M&A chatter and Amazon’s green energy push cast a shadow over near-term supply-demand balances. Investors are now parsing whether this selloff is a buying opportunity or a warning sign.

Copper Sector Volatility and Strategic M&A Rumors Weigh on Freeport-McMoRan
The selloff stems from a confluence of sector-specific pressures. Amazon’s Arizona copper project, leveraging bioleaching technology, threatens to disrupt traditional mining economics by reducing extraction costs. Simultaneously, RBC’s report on a potential Rio Tinto-Glencore merger has spooked investors, suggesting a consolidation wave could reshape copper supply chains. Freeport-McMoRan’s own production timelines—targeting first copper from Arizona within weeks—add urgency to these dynamics. The stock’s 2.7% drop reflects immediate concerns over oversupply risks and margin compression in a sector already grappling with geopolitical and technological shifts.

Copper Sector Mixed as Freeport-McMoRan Trails Sector Leader Southern Copper
While Freeport-McMoRan’s -2.7% decline outpaces the sector’s broader movement, Southern Copper (SCCO) fell 1.4%, indicating sector-wide fragility. The disparity highlights FCX’s vulnerability to speculative positioning, given its larger market cap and exposure to U.S. copper markets. Amazon’s Arizona project and RBC’s merger thesis disproportionately affect FCX due to its geographic and operational focus on North American assets, contrasting with SCCO’s diversified Latin American holdings.

Navigating FCX’s Technicals: Options and ETFs for a Volatile Copper Market
• RSI: 73.4 (overbought)
• MACD: 3.56 (bullish), Signal Line: 3.07
• Bollinger Bands: Upper $61.40, Middle $53.66, Lower $45.91
• 200D MA: $42.36 (far below current price)

FCX’s technicals suggest a short-term overbought condition, with RSI near 73 and MACD divergence hinting at exhaustion. The stock is trading above its 200-day average by 38%, but Bollinger Bands show a wide range, reflecting high volatility. A 5% downside scenario (to $55.41) would test critical support at $55.50, where the 100D MA ($44.73) and 30D MA ($51.14) confluence could trigger a rebound. However, the 52-week low at $27.66 remains a distant concern.

Top Options Picks:
• FCX20260123P58 (Put, Strike $58, Expiry 1/23):
- IV: 48.82% (moderate)
- LVR: 40.90%
- Delta: -0.436 (moderate sensitivity)
- Theta: -0.0032 (low decay)
- Gamma: 0.0931 (high sensitivity to price shifts)
- Turnover: 360,782 (liquid)
- Payoff at $55.41: $2.59 per contract. This put offers a 45% leverage ratio and high gamma, ideal for capitalizing on a sharp decline.

• FCX20260123P57 (Put, Strike $57, Expiry 1/23):
- IV: 49.06% (moderate)
- LVR: 57.34%
- Delta: -0.345 (moderate sensitivity)
- Theta: -0.0187 (moderate decay)
- Gamma: 0.0867 (high sensitivity)
- Turnover: 14,964 (liquid)
- Payoff at $55.41: $1.59 per contract. This put’s 57% leverage ratio and 0.0867 gamma make it a high-conviction bearish play.

Aggressive bulls should consider FCX20260123C55 (Call, Strike $55, Expiry 1/23) if the stock rebounds above $58.82. The 14.96% leverage ratio and 0.825 delta offer asymmetric upside if the sector stabilizes.

Backtest Freeport-McMoRan Stock Performance
The backtest of FCX's performance after an intraday plunge of -3% from 2022 to the present shows favorable short-to-medium-term gains. The 3-Day win rate is 52.78%, the 10-Day win rate is 51.39%, and the 30-Day win rate is 52.78%, indicating a higher probability of positive returns in the immediate aftermath of the plunge. The maximum return during the backtest period was 3.81%, which occurred on day 59, suggesting that while gains are possible, they may not always be immediate and can vary significantly in magnitude.

Act Now: Freeport-McMoRan’s Crucial Support Levels and Sector Shifts Demand Immediate Attention
FCX’s 2.7% drop has exposed a fragile technical structure, with the 52-week low ($27.66) and $55.50 support level acting as critical psychological barriers. The options market’s heavy put activity—particularly the 360,782 contracts on FCX20260123P58—signals a bearish consensus. However, the sector’s mixed performance (SCCO -1.4%) suggests broader risks, not just FCX-specific issues. Investors should monitor Amazon’s Arizona project timeline and the RBC-telegraphed Rio-Glencore merger for catalysts. A breakdown below $55.50 would validate the bear case, while a rebound above $58.82 could reignite long-term bullish momentum. Watch for $55.50 support and the 1/23 options expiry for directional clarity.