Traders are betting this mining stock is ready for a rally

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Options traders see major upside in Freeport-McMoRan

A big name in the mining space is ready to rally.

Freeport-McMoRan is on a tear, up more than 30 percent in 2019 and fresh off its upgrade from Citigroup. Now traders are placing bets on how high the stock can go from here.

Freeport-McMoRan's upgrade stems from Citi's valuation of their domestic core assets as favorably positioned to take advantage of what they see as a longer-term copper rally, and it's giving the already busy stock an extra jolt.

"We saw about three times the average daily call volume in Freeport-McMoRan, and this is a name that creates quite a lot of calls to begin with. It traded over 120,000 contracts today," "Options Action" trader Mike Khouw said Tuesday on CNBC's "Fast Money."

"Most active were the April 14-calls; we saw a block of 16,500 of those purchased for just over $0.50. It was a bullish trader who was actually rolling a previous bullish bet from the March 12-calls out and up to the April 14s. That's obviously a bullish bet that it's going to be higher than that $14 strike price by at least the $0.53 that they paid," added Khouw.

That breakeven price of $14.53 is about 10 percent higher than where the stock sat on Tuesday, and about halfway between the strike price and Citigroup's new price target of $16. It's an aggressive bet, but another win certainly wouldn't catch this trader by surprise.

"I would point out that [this trader] had already doubled their money on the calls that they were selling today, so this is somebody who was bullish prior to this bet, made money, and is taking some of those proceeds and pressing that bullish bet further out over the next 60 days," explained Khouw.

Shares of Freeport-McMoRan were trading more than 3 percent higher on Wednesday.