Copper and other base metals succumbed to bearish sentiment and tested key support levels before firming up at the end of trading last week. The downturn in copper reflected concerns that Chinese government efforts to cool the economy are leading to a collapse in property prices. Could this be sub-prime part deux? Perhaps, but that’s a story for another day.

China’s roaring commercial and housing property market contributes to its standing as the world’s largest consumer of copper. Add anxieties about how the eurozone debt troubles might affect Europe’s fragile recovery, and you get a recipe for weak prices. Copper has, in fact, lost 26% since peaking in April.

Add anxieties about how the eurozone debt troubles might affect Europe’s fragile recovery, and you get a recipe for weak prices. Copper has, in fact, lost 26% since peaking in April. Although, based on a slight recovery at the end of last week, you could argue that the market overshot the downside.

In the latter part of last week, there were some generally favorable economic reports emanating from China, and encouraging words about the US economy from Fed Chairman Ben Bernanke. That combination seemed to be enough to turnaround the copper market. By Friday’s close spot copper settled at US$2.92 per pound, up from US$2.77 earlier in the week.

If the numbers at the end of last week are to be believed, then this might be an opportune time for aggressive options traders to lever a recovery in copper by taking bullish positions in Canadian-listed copper miners, such as Teck Resources Ltd. (TSX: TCK.B, Friday’s close $34.93). I talked a couple of weeks ago about a covered call write on the stock. For more aggressive traders, take a look at buying TCK July 37 calls at $1.05.