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Mosaic and Potash of Saskatechewan Calls

Apr 22 2008

Mosaic and Potash of Saskatechewan Calls

    One of the best trades I have made in the past three weeks has been long-term Calls in two fertilizer producers and distributors, Mosaic (MOS) and Potash (POT). I currently own September 2008 Calls with strike prices of 135 and 230 respectively.

    The Mosaic Calls I picked up for $15 a piece and they have rallied along with the stock for an 81.33% gain since April 7th. The Potash Calls I picked up for $19 a piece on April 18th and have watched them rally to $27.20 today for a 41.05% gain.

    With the IPO of Intrepid Potash today, I suspect Potash will rally again tomorrow. The company’s earnings are also scheduled for the 24th. I want to close out this position prior to the earnings as earnings are never a certain thing. If the earnings come in above expectations and the company does not warn in future quarters, I will reestablish a similar position again.

    I want to let the Mosaic Calls run through the fertilizer company earnings this week as the company has already announced their quarter on the 4th. If the return on the Calls reaches 100%, I will close out the position and purchase a similar position at half the value and look for other areas to invest the remaining proceeds.

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