Southern Copper (SCCO) Soars 3.5% on Copper Price Rally and Earnings Optimism – Is the Bull Run Sustainable?

Summary
• Southern Copper (SCCO) surges 3.54% intraday to $176.56, hitting its 52-week high of $177.22
• Copper prices climb 39.2% year-to-date amid supply constraints and policy easing expectations
• Earnings estimates for SCCO’s upcoming quarter have risen 17.2% in 30 days, signaling strong fundamentals
• Unusual options activity sees 760% spike in put volume, hinting at mixed sentiment

Southern Copper’s shares are surging on a perfect storm of rising copper prices, bullish earnings revisions, and speculative trading. With the stock trading near its 52-week high and the broader copper sector rallying, investors are weighing whether this momentum is a fleeting spike or the start of a sustained bull run. The key lies in dissecting the interplay between macroeconomic drivers and technical indicators.

Copper Price Surge and Earnings Optimism Fuel SCCO’s Rally
Southern Copper’s 3.54% intraday gain is directly tied to the 39.2% annual surge in copper prices, which hit a record $6 per pound. Tightening supply concerns—exacerbated by strikes at Chile’s Mantoverde mine and disruptions in Indonesia—have amplified scarcity fears. Simultaneously, SCCO’s earnings estimates for its upcoming quarter have risen 17.2% in 30 days, driven by a 44.6% year-over-year EPS forecast and $3.62 billion revenue projection. This confluence of physical commodity strength and financial optimism has ignited buying momentum, particularly as investors anticipate further rate cuts and Chinese policy easing to bolster demand.

Copper Sector Gains Momentum as Freeport-McMoRan Surges 3.86%
The copper sector is rallying in lockstep with SCCO, led by Freeport-McMoRan (FCX), which has surged 3.86% intraday. FCX’s 30.1% revenue growth and 44.6% EPS increase mirror SCCO’s trajectory, reflecting the sector’s shared exposure to copper’s record prices. While SCCO’s rally is fueled by earnings revisions and speculative options activity, FCX’s gains stem from operational resilience and higher-grade ore production. Both stocks benefit from the same macro tailwinds—tight supply and energy transition demand—but SCCO’s elevated P/E ratio (35.8x) suggests it is pricing in more aggressive growth expectations.

Options and ETFs to Capitalize on SCCO’s Bullish Momentum
• MACD: 6.46 (above signal line 4.64), RSI: 81.6 (overbought), Bollinger Bands: Price at $176.56 (above upper band $164.75)
• 200-day MA: $110.82 (far below), 30-day MA: $145.44 (support), Key Resistance: $177.22 (52W high)

SCCO’s technicals suggest a continuation of its bullish trend, with RSI near overbought territory and MACD divergence hinting at potential exhaustion. However, the stock remains above its 30-day MA and is testing its 52-week high. For options, SCCO20260116C180 (call, strike $180, expiring 1/16) and SCCO20260116C175 (call, strike $175) stand out. The former offers a 75.14% leverage ratio and 0.4560 delta, ideal for a 5% upside scenario (projected payoff: $17.78). The latter, with 38.39% leverage and 0.5801 delta, provides a balanced risk-reward profile. Both contracts exhibit high gamma (0.0401–0.0417) and moderate implied volatility (45.6%–45.36%), ensuring sensitivity to price moves without excessive premium decay. Aggressive bulls should target a breakout above $177.22, with a stop-loss near the 30-day MA at $145.44.

Backtest Southern Copper Stock Performance
The backtest of SCCO's performance after a 4% intraday surge from 2022 to the present indicates positive short-to-medium-term gains. The 3-Day win rate is 53.86%, the 10-Day win rate is 53.47%, and the 30-Day win rate is 58.30%, suggesting that the stock tends to perform well in the immediate aftermath of such events. The maximum return observed was 5.86% over 30 days, indicating that there is potential for significant price appreciation following the intraday surge.

SCCO’s Bull Run Faces Crucial Test – Act Now to Secure Gains
Southern Copper’s rally is underpinned by robust copper fundamentals and earnings optimism, but its overbought RSI and 52-week high test suggest caution. The key to sustainability lies in maintaining momentum above $177.22 and avoiding a breakdown below $164.75 (Bollinger upper band). With Freeport-McMoRan (FCX) surging 3.86%, the sector’s strength reinforces SCCO’s case. Investors should monitor the 1/16 options expiration for liquidity clues and watch for a pullback to $145.44 (30-day MA) as a potential entry point. For now, the bull case holds, but volatility remains high—position sizing and stop-loss discipline are paramount.