Tuesday, December 21, 2010

Options in Play: The Mosaic Company and Potash Corp. of Saskatchewan (MOS; POT)

The ferts have sure been in the headlines, here's the latest from Schaeffer's Research:
Fertilizer firms are in focus today, as traders place a new crop of bets on The Mosaic Company (MOS) and Potash Corp. of Saskatchewan (POT). Calls are the options of choice on both stocks -- but MOS has attracted the attention of long-term traders, while POT's front-month options are in play.

MOS price chartCall volume has accelerated to twice the usual level on MOS, with roughly 13,000 contracts crossing the tape so far. Meanwhile, just 4,427 puts have been exchanged.

The center of attention is MOS' June 100 call, where 5,687 contracts have traded -- 97% at the ask price, indicating they were most likely purchased. This strike currently carries open interest of just 335 contracts, so it's safe to assume that new bullish bets are being added here today.

MOS is up 1.9% this afternoon, despite a general lack of news, with the stock gearing up to test resistance in the $70 region. (In other words, those 100-strike calls are out of the money by a significant margin.) During the next couple of weeks, traders should keep an eye out for MOS' fiscal second-quarter earnings report, which is due to hit the Street after the market closes on Jan. 4....MORE