Freeport-McMoRan Surges 4% Amid Copper Market Turmoil: What's Fueling the Rally?

Summary
• Freeport-McMoRan (FCX) surges 4.04% to $38.62, hitting an intraday high of $38.655
• Bank of America upgrades FCX to 'Buy' amid Grasberg mine accident-driven supply deficit
• Copper prices climb to $10,300/ton as global supply tightens

Freeport-McMoRan’s stock is surging on a perfect storm of supply-side shocks and bullish analyst sentiment. The Grasberg mine disaster has triggered a re-rating of copper’s long-term fundamentals, while BofA’s upgrade signals a shift in market sentiment. With FCX trading near its 52-week low of $27.66 just weeks ago, today’s 4% rally reflects a rapid reassessment of risk and reward in the copper complex.

Grasberg Mine Accident Sparks Reassessment of Copper Supply Risks
The 4.04% intraday surge in FCX stems from a dual catalyst: a supply-side shock at the Grasberg mine and a rapid market re-rating of copper’s long-term fundamentals. The September 8 'mud rush' at Grasberg—Freeport’s crown jewel asset—forced a force majeure declaration, halting 4% of global copper output. While the accident initially triggered a 6.4% selloff, Bank of America’s upgrade to 'Buy' (from 'Neutral') on September 30, 2025, marked a turning point. Analysts now argue the worst-case scenarios are priced in, with a phased restart of Grasberg expected by H1 2026. This transparency, combined with Freeport’s strong Q3 2025 earnings ($0.54 EPS) and a current ratio of 2.47, has shifted focus to the company’s long-term value proposition.

Copper Sector Volatility Intensifies as FCX Leads S&P 500 Gainers
The copper sector is in turmoil as supply disruptions cascade across major producers. Freeport-McMoRan’s 4% rally contrasts sharply with Southern Copper (SCCO), which fell 0.91% despite the broader copper rally. This divergence highlights FCX’s unique position as a bellwether for global supply tightness. While SCCO’s decline reflects near-term operational challenges, FCX’s surge underscores its role as a proxy for the widening copper deficit. Goldman Sachs now forecasts a 533,000-ton deficit in 2027, with FCX’s Grasberg disruption accounting for 525,000 tons of lost supply. The sector’s volatility is further amplified by regulatory scrutiny and safety concerns following the Grasberg incident.

Options Playbook: Capitalizing on FCX's Volatility with Strategic Calls
• RSI: 30.19 (oversold)
• MACD: -1.54 (bearish divergence)
• Bollinger Bands: $36.12–$51.07 (wide range)
• 200-day MA: $39.93 (below current price)

FCX’s technicals suggest a short-term rebound is in play, with key support at $37.81 and resistance at $40.55. The stock’s 4% rally has pushed it closer to the 200-day MA, but the RSI at 30.19 indicates oversold conditions. For traders, the most compelling options are the October 10-dated calls with strike prices at $38 and $39. These contracts offer high leverage (25.83%–38.74%) and moderate deltas (0.62–0.48), balancing directional exposure with time decay. The FCX20251010C38 (leverage 25.83%, IV 40.26%) and FCX20251010C39 (leverage 38.74%, IV 41.23%) are top picks due to their high turnover ($35,069 and $85,553) and gamma sensitivity (0.1397–0.1436).

FCX20251010C38:
• Code: FCX20251010C38
• Type: Call
• Strike: $38
• Expiry: 2025-10-10
• IV: 40.26% (moderate)
• Leverage: 25.83% (high)
• Delta: 0.6266 (moderate)
• Theta: -0.0971 (high decay)
• Gamma: 0.1397 (high sensitivity)
• Turnover: $35,069 (liquid)
• Payoff (5% upside): $2.93/share
• Why it stands out: High leverage and liquidity make this ideal for a short-term bullish bet on FCX’s rebound.

FCX20251010C39:
• Code: FCX20251010C39
• Type: Call
• Strike: $39
• Expiry: 2025-10-10
• IV: 41.23% (moderate)
• Leverage: 38.74% (very high)
• Delta: 0.4818 (moderate)
• Theta: -0.0896 (high decay)
• Gamma: 0.1436 (high sensitivity)
• Turnover: $85,553 (very liquid)
• Payoff (5% upside): $1.55/share
• Why it stands out: The highest leverage ratio and turnover make this a high-conviction play on FCX’s near-term momentum.

Aggressive bulls should consider FCX20251010C39 into a break above $39.50, while conservative traders may target FCX20251010C38 for a safer entry.

Backtest Freeport-McMoRan Stock Performance
Freeport-McMoRan (FCX) experienced a notable intraday surge of approximately 4% on December 1, 2022. Let's evaluate FCX's performance following this surge:1. Short-Term Gains Erode: FCX's recent performance, including the 4% surge, has been overshadowed by broader market trends and economic indicators. The stock has since faced downward pressure, dropping more than the broader markets on December 13, 2022.2. Oversupply Concerns Loom: The copper market faces a significant oversupply, which is likely impacting FCX's stock valuation. The upcoming influx of new copper mine supply and increased treatment and refining charges (TCRCs) for smelters suggest that FCX's operational costs and competitive positioning could be affected.3. Sales Guidance Trim: FCX's recent trimming of copper sales guidance has contributed to the stock's decline, as investor confidence may be waning due to perceived weaknesses in the company's outlook.4. Long-Term Outlook: Despite the short-term challenges, FCX remains a solid long-term investment, given its dominant position in the copper market and the potential for copper price increases due to global supply constraints.In conclusion, while FCX had a positive reaction to the 4% intraday surge on December 1, 2022, the stock has since given up those gains and faced additional headwinds. The company's long-term prospects in the copper market remain strong, but the immediate outlook is tempered by concerns over oversupply, sales guidance, and economic indicators.

FCX at a Pivotal Crossroads: Positioning for a Copper-Driven Recovery
Freeport-McMoRan’s 4% rally reflects a market pivot from panic to optimism, but the path forward remains fraught. The Grasberg restart timeline and copper price projections ($13,500–$15,000/ton by 2027) are critical watchpoints. Traders should monitor the October 10-dated options for liquidity and directional bias, while investors should track SCCO’s -0.91% move as a sector barometer. With FCX trading at 6.3x 2026 EBITDA versus a peer average of 8.6x, the stock offers compelling value if the Grasberg recovery aligns with management’s timeline. Act now: Buy FCX20251010C39 if $39.50 breaks, or short SCCO if copper prices stabilize.