Zhang looked at the copper-to-gold ratio and he noticed it broke above its 200-day moving average and also above its major resistance. Zhang said Freeport-McMoRan is currently trading around its major resistance level of $20 and he expects the stock to move higher and reach $24.
To make a bullish bet, Zhang wants to buy the January $20/$24 call spread for $1.25. The trade breaks even at $21.25, or around 5.5% above the current stock price. If the stock jumps to $24, or higher, the trade would reach its maximum profit of $2.75.