MOS – The Mosaic Company – Shares of the crop nutrient and animal feed producer have jumped higher by 5% today to $43.26. Options activity today seems to be a sign of the positive movement in MOS’s share price. One investor initiated what appears to be a 7,500 lot call spread in the March contract. Though the calls were traded to the middle of the market, we believe that this trader purchased 7,500 calls at the March 45 strike for 3.97 and sold 7,500 calls at the March 60 strike price for a premium of 1.00 per contract. By taking in the 1.00 premium, this investor is effectively financing the call spread and lowers his net cost to 2.97. Shares of Mosaic would need to rally to a breakeven price of $47.97 per share in order for this trader to reel in profits.
POT – Potash Corporation of Saskatchewan, Inc. – The integrated fertilizer and feed products company stood out this morning due to some interesting options plays amid a share price rally of 5% to $90.22. It appears that one 5,000 lot 75/95 March call spread was unwound today, perhaps because this investor has realized substantial profits from a previously established hunch that shares would rally. Focus has since shifted to the put side, where one investor purchased 15,000 puts at the June 65 strike price for 5.50 apiece. As shares breathe a sigh of relief on today’s lift, this medium-term bear took advantage of falling put premiums and established substantial protection. We believe that this large trade contributed to the rise in option implied volatility on the stock by 17% to 77%. Though shares have reached a four month high, it appears that this trader still feels the acrid sting of POT’s 52-week low of $47.44 back in December of 2008. While fertilizer seems to be the hot new item, this bear does not look to be ready to join the crowd just yet.
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