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.