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This stock could rally 130 percent in one year: Trader

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This beaten stock has found a bottom: Trader

After years of back-to-back declines, Freeport McMoRan is showing signs of life.

The left-for-dead stock rallied nearly 7 percent Tuesday after the mining giant reported a narrower-than-expected quarterly loss. According to one trader, this could be the start of a furious rally over the course of the next year.

Looking at a long-term chart of Freeport-McMoRan, Andrew Keene noted that after getting pummeled over the last few years, the shares have consolidated in 2016. "This means there is a battle between the bulls and the bears on where they think the stock could go," he said.

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Shares of the commodity-sensitive stock have fallen more than 90 percent in the last five years, as oil and prices have gotten crushed. But that's all come to a head as Keene believes the commodity space could be turning around.

"I think it has bottomed." Freeport-McMoRan hit a multiyear low of $3.52 just last week. "The stock is going higher," added the founder of AlphaShark Trading.

"I think we could get back up to $8 to $10 by January 2017," said Keene. That's as much as a 138 percent move from its current trading price of around $4.20 a share.

To play for a move higher, Keene bought a call spread. This is a bullish strategy where a trader will buy a call and then sell a higher strike call of the same expiration to offset the cost. The goal is for the stock to rise to the call you are short.

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Specifically, Keene bought the January 2017 5/8 call spread for 60 cents. "If Freeport-McMoRan closes above $8 by January 2017, which isn't that much considering the stock was trading at $18 last summer, then I can get 400 percent returns on my trade," he said.