Traders place bets on the future of metal

The frenzy in the copper market lures traders into taking high bets when prices return.

Copper rates have climbed above $ 10,000 per metric ton for December 2018 contacts over the past two weeks, according to the London Metal Exchange. In total, traders spent about $ 4.5 million on contracts.

Copper is up 23% this year at $ 6,820 a tonne on the LME, and hit a three-year high last month.

Traders will be rewarded if the options expire in the money. They bought $ 2.5 million in options Thursday, which would pay out about $ 10 million if copper hit $ 10,200 by December next year. Options will cost $ 28.8 million if copper reaches $ 10,500.

Copper has not traded at these levels since 2011, the peak of a commodity boom largely fueled by China's booming economy, the largest user. The bulk of the bets came in last week during the mining industry's annual meeting in London and suggests that traders are becoming increasingly optimistic on demand driven by electric cars.