Alcoa and Aluminum Corp. of China, known as Chinalco, have jointly acquired a 12% stake in Rio Tinto, Alcoa announced Friday, in a statement.

The deal is estimated to be worth $14.05 billion, and represents the largest overseas investment by a Chinese company, Chinalco said. Alcoa Inc. (NYSE: AA) said it would contribute $1.2 billion to the investment.

Alcoa's shares closed Friday up $1.19 to $34.15 on the news, as did Rio Tinto plc (ADR) (NYSE: RTP), which closed up $34.05 to $441.00.

Alcoa and Chinalco's stake could very well obstruct a bid from Anglo-Australian mining giant BHP Billiton for Rio Tinto, the Associated Press reported. BHP Billiton Limited (ADR) (NYSE: BHP) closed up $6.15 to $73.73.

The market's choppy/consolidating (or perhaps worse) period continues. No single market participant can change that reality, but you can make the best of it -- specifically by looking for bargains.

Miner Freeport-McMoRan (NYSE: FCX) is one such opportunity. Freeport is the world's second-largest copper producer and a major miner of gold and molybdenum. Further, FCX's purchase of Phelps Dodge in March 2007 means that the company now has proven and probable reserves of: copper, 75 billion pounds; gold, 128 million ounces; and molybdenum, 1.9 billion pounds, net minority interests.

But perhaps most important, Freeport is one of only eight companies that have the economies of scale to compete in the global mining sector of the early 21st century. Look for continued merger/acquisition talk in the sector, but don't think of Freeport as an acquisition play: FCX has a large portion of the global copper market, geographical diversification, and enduring relationships with key customers, among other strengths, to continue to perform well in the years ahead.

Note: The Daily Option Update is provided by Stock Options Specialist Paul Foster of theflyonthewall.com.

Volatility Index S&P 500 Options-VIX is up .75 to 16.17.

Alcan Aluminum Inc-(NYSE:AL) option implied volatility and volume spikes on M&A report. AL is recently up $1.87 to $53.86 on an M&A report from Estado de S. Paulo. AL is a global materials company with 65,000 employees in 59 countries generating revenues of $23.6 billion in 2006. AL has a market cap of $19.2 billion with long-term debt of $5.4 billion. AL March option implied volatility of 56 and April at 38 is above its 26-week average of 35 according to Track Data, suggesting larger price fluctuations.

Alcoa Inc-(NYSE:AA) March option implied volatility elevated suggesting more Risk. AA, the world's biggest aluminum processor, has a market cap of $29.34 billion. AA is recently up .37 to $33.78. AA is frequently mentioned as an M&A target. LME Aluminum HG is down 2.35% to 2829.00 according to Bloomberg. AA March option implied volatility of 36 is above its 26-week average of 29 according to Track Data, suggesting larger price fluctuations.

BHP Billiton Ltd-(NYSE:BHP) March option implied volatility suggests Flat Risk. BHP, the world's largest mining company, has a market cap of $125 billion, is recently down .43 to $42.50. BHP has been frequently mentioned during the last 52-weeks as having an interest in doing a deal with FCX, AL & AA. BHP overall option implied volatility of 31 is near its 26-week average according to Track Data, suggesting non-directional price fluctuations.

Option volume leaders today were: Amgen (NASDAQ:AMGN), Goldman Sachs (NYSE:GS), Intel (NASDAQ:INTC) and Apple Computer (NASDAQ:AAPL).

Back on October 23, 2006 investment guru Jim Cramer came out strongly against Bare Escentuals (NASDAQ: (GS) BARE). I pitted my opinion against Cramers and "let it ride". I've just finished doing a cursory check on Bare Escentuals to see how they have fared. Suffice it to say, I hope no one sold their BARE shares based on Cramers advice.

The chart attached herein shall provide the whole story. My words are really not needed. Besides, I'm just a dude living up here in the woods and making cabinet panels for a living. What could I possibly know about investing? Bare Escentuals just went public in September of this year. Their performance thus far appears healthy to me.

The two stocks that Cramer liked in place of Bare Escentuals were Allergan (NYSE: AGN) and Medicis Pharmaceutical (NYSE: MRX). I will concede to Cramer that those two stocks have moved upward also. My point here is small and simple: You don't need a television crew and a stable of financial analysts to pick a winner now and then. If you have good instincts and the willingness to do your own research, you too can pick some stocks which will pay you to own. To quote my bald headed nemesis: "Do your homework."

(Image courtesy of Norton Sales)