🕒 Market Overview: Copper futures exploded 13% to $5.69 per pound following Trump's 50% tariff announcement

🔄 Sector Insight: Mining stocks surge while copper-intensive industries face margin compression ahead of August 1st deadline

💰 Today's Trade Idea: Bull Call Spread on FCX capitalizes on copper producer's upside potential

MARKET BREAKDOWN

Macro Lens – Big Picture Market Forces

Trump's July 8th announcement of a 50% tariff on copper imports represents more than commodity price manipulation—it signals a fundamental shift in trade policy. The tariff forces the Federal Reserve into an impossible position, needing to combat tariff-induced inflation while maintaining economic stability. Powell has already hinted at keeping rates "higher for longer" to address trade-driven price pressures.

The VIX dropped to 16.81 despite copper's explosive move, suggesting markets view this as sector-specific rather than economy-wide disruption. However, with the effective U.S. tariff rate now at levels not seen since 1903, traditional market relationships may no longer apply. The 0DTE options market, representing over 40% of S&P 500 options volume, amplified every price movement as traders positioned for immediate chaos.

Sector and Stock Watch – Identifying Key Movers

Copper miners experienced immediate windfall gains as domestic producers benefit from higher prices without facing import costs. Freeport-McMoRan (FCX) leads this charge, with shares trading around $45.50 after reaching historic highs. The Global X Copper Miners ETF (COPX) saw implied volatility surge as traders positioned for what could be a multi-year bull run.

Conversely, copper-intensive industries face margin compression. Construction companies, electronics manufacturers, and electric vehicle charging infrastructure providers must absorb higher input costs. Goldman Sachs projects copper reaching $12,000 per ton by mid-2026, making this more than a temporary price spike—it's a structural shift requiring supply chain reorganization.

Trading Strategy in Focus – How to Play the Market

The copper tariff creates a regime change requiring new trading approaches. Traditional hedges may fail as tariff-induced inflation disrupts standard stock-bond correlations. Volatility traders should focus on the commodity complex, where elevated pricing will persist. The CME's copper volatility index (CVOL) indicates continued chaos, with similar dynamics likely spreading to other commodities as markets anticipate additional tariff announcements.

Mining stocks versus copper-intensive industries becomes the new sector rotation play. Unlike market-driven valuations, government policy now picks winners and losers through trade barriers. This creates unique opportunities for options traders who can navigate the intersection of geopolitical risk, commodity volatility, and monetary policy uncertainty.

SMART TRADE IDEA

 Bull Call Spread on FCX

Trade Setup: Buy $45 Call / Sell $55 Call, January 16, 2026 expiration.

• Cost: $3.60 ($360 per spread)

• Max Profit: $6.40 ($640 per spread)

• Breakeven:   $48.60 per share

Management Plan:

•  Exit at 50% loss, roll up if FCX 's share price reaches $54

Copper prices have exploded to new highs, which will boost FCX and other copper producers' earnings. FCX is a leading copper producer that will benefit from the red metal's bullish trend, which could drive the price above $6 per pound over the coming weeks and months. The January 16, 2026, vertical bull call spread has over six months until expiration.  

NOTE: Remember, options trading involves substantial risk and is not suitable for all investors. Consider your investment objectives, financial resources, and experience level before implementing this or any options strategy.

DISCLOSURE: Trade recommendations may have changed since publication. Evaluate current market prices and risk/reward before acting. Trading involves significant risk and is not suitable for everyone. This is not personalized investment advice. Past performance doesn't guarantee future results. Publisher and contributors may hold positions in recommended securities. Readers assume full responsibility for their trading decisions. Consult a financial professional before investing.

While President Trump's July 8 announcement of a 50% tariff on copper shocked the market, the price action came as no surprise to those following the technicals and supply and demand fundamentals of the copper market. A late-March 2025 article on base metals on the Tradier Hub outlined the case for higher copper and base metal prices. Goldman Sachs analysts referred to copper as "The New Oil" in 2022, citing its applications in green energy initiatives. Many analysts, including Goldman Sachs, have said that copper prices could rise to $15,000 per ton or higher, translating to around $6.80 per pound, over the coming years. Copper has been in a bull market for years, making higher lows and higher highs.

The quarterly chart highlights the ascent of the nonferrous metal and its July 8 spike to a new record high following Tuesday's 2025 tariff announcement. The copper market had been preparing for the trade barriers, with copper inventories moving from the London Metals Exchange to COMEX warehouses. The prospects of tariffs lifted copper prices to a new all-time high in March 2025, but when the initial announcement excluded copper, the price dropped from over $5 to just above $4 per pound. Copper held above its technical support level, and the selloff was a golden buying opportunity.

The world's three leading copper-producing companies are BHP, Codelco, and Freeport McMoran (FCX). China is the world's leading consumer of copper, accounting for over half of the world's refined copper supplies. While the tariffs will distort U.S. copper prices, global producers will benefit from the surge in prices, and consumers will pay more for the metal that suffers from a supply-demand deficit.

The quarterly chart shows that FCX shares have been in a bullish trend since the 2020 pandemic-inspired low. FCX shares reached a record high of $63.62 in 2008. At around $45.50 per share on July 9, 2025, the leading copper producer's shares could have significant upside potential. The January 16, 2026, $45-$55 vertical bull call spread at $3.60 per share has a better than 1:1.75 risk-reward ratio.

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