Southern Copper Surges 2.9% on Earnings Optimism and Copper Rally – What’s Fueling the Momentum?

Summary
• Southern Copper (SCCO) rockets 2.9% to $148.16, hitting its 52-week high of $148.37
• Zacks Consensus Earnings Estimate for FY2025 rises 0.2% on revised revenue and EPS projections
• Copper prices surge to record highs on Fed rate cuts and global supply tightness

Today’s 2.9% rally in Southern Copper reflects a confluence of bullish catalysts: upward revisions to earnings estimates, a 6.8% surge in the Zacks Mining - Non Ferrous sector, and a broader copper market boom driven by U.S. infrastructure spending and AI-driven demand. The stock’s intraday range of $143.44 to $148.37 underscores its volatility amid shifting investor sentiment.

Earnings Revisions and Copper Demand Drive SCCO’s Rally
Southern Copper’s 2.9% surge is anchored by a 0.2% upward revision to its FY2025 consensus earnings estimate ($5.19/share) and a 0.9% increase for FY2026 ($5.86/share), reflecting optimism about its production of silver, zinc, and molybdenum. Simultaneously, copper prices hit $11,771/ton on the LME, fueled by the Fed’s 25-basis-point rate cut, U.S. tariff fears, and China’s proactive fiscal stimulus. These factors have amplified demand for copper in renewable energy and data-center infrastructure, directly boosting SCCO’s commodity-linked valuation.

Copper Sector Soars as SCCO Gains 0.99%
The Zacks Mining - Non Ferrous sector has surged 6.8% over the past month, outpacing SCCO’s 5.3% gain. Freeport-McMoRan (FCX) leads the sector with a 9.1% monthly rally, while SCCO’s 0.99% intraday rise reflects its focus on copper and by-product metals. The sector’s strength is driven by AI-driven data-center demand and U.S. fiscal stimulus, though SCCO’s Zacks Rank 3 (Hold) suggests its near-term trajectory may align more closely with broader market trends than sector peers.

Options and ETFs to Capitalize on SCCO’s Volatility
• Technical Indicators: RSI at 80.35 (overbought), MACD 3.04 (bullish), 200D MA at $105.26 (far below current price)
• Key Levels: Support at $138.23–$138.71 (30D), resistance at $146.53 (Bollinger Upper Band)

SCCO’s 2.9% rally has pushed it into overbought territory (RSI 80.35), but its 30D MA at $134.50 and 200D MA at $105.26 suggest strong momentum. Two options stand out for their leverage and liquidity:

• SCCO20251219C140 (Call): Strike $140, IV 31.23%, leverage 17.26%, delta 0.88, theta -0.33, gamma 0.027, turnover 10,712
- IV: Moderate volatility supports directional bets
- Delta: High sensitivity to price movement
- Theta: Aggressive time decay favors short-term holding
- Turnover: High liquidity ensures smooth entry/exit
- Payoff: $2.86/share if SCCO hits $145 (5% upside from $148.16)
- Why it stands out: Ideal for capitalizing on a breakout above $146.53 (Bollinger Upper Band), with high gamma amplifying gains if the stock accelerates.

• SCCO20251219C145 (Call): Strike $145, IV 39.92%, leverage 27.17%, delta 0.646, theta -0.382, gamma 0.040, turnover 11,941
- IV: Elevated volatility reflects sector optimism
- Delta: Balanced sensitivity for moderate bullish moves
- Theta: High time decay suits short-term speculation
- Turnover: Strong liquidity for active trading
- Payoff: $3.36/share if SCCO reaches $150.57 (5% upside from $148.16)
- Why it stands out: Offers a cost-effective leveraged play on SCCO’s 52-week high ($148.37), with gamma amplifying returns if the stock breaks above $146.53.

Action: Aggressive bulls should target SCCO20251219C140 into a break above $146.53, while conservative traders may use SCCO20251219C145 for a safer, high-gamma position.

Backtest Southern Copper Stock Performance
The backtest of SCCO's performance following a 3% intraday surge from 2022 to the present indicates positive short-to-medium-term gains, with the 3-Day win rate at 55.36%, the 10-Day win rate at 55.16%, and the 30-Day win rate at 59.92%. The maximum return observed was 5.76% over 59 days, suggesting that while there is volatility, SCCO can exhibit favorable performance in the immediate aftermath of such an increase.

SCCO’s Rally Faces Earnings and Legal Hurdles – Act Now on Sector Strength
Southern Copper’s 2.9% surge is underpinned by robust copper demand and earnings revisions, but its Zacks Rank 3 (Hold) and recent insider selling (e.g., director’s 24% stake reduction) suggest caution. The stock’s 52-week high at $148.37 aligns with its Bollinger Upper Band, but a breakdown below $138.23 (30D support) could trigger profit-taking. Sector leader Freeport-McMoRan (FCX) has surged 3.5% intraday, reflecting broader copper optimism. Investors should monitor SCCO’s 52-week high and the $145 strike for options activity, while hedging against legal risks (e.g., Natixis’ 58% stake reduction). Act now: Buy SCCO20251219C140 into a break above $146.53 for a high-gamma, leveraged play on the copper supercycle.