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Put Options on POT on 9/23/2015

Bearish Flag on POTPotash Corporation of Saskatchewan Inc. (POT) produces and sells fertilizers and related industrial and feed products worldwide.

The company operates in three segments: Potash, Nitrogen, and Phosphate.

It mines and produces potash, which is primarily used as fertilizer. The company also offers solid and liquid phosphate fertilizers; animal feed supplements; purified phosphoric acid, which is used in food products and industrial processes; hydrofluosilicic acid; and silicon tetrafluoride. In addition, it produces nitrogen fertilizers and nitrogen feed, as well as industrial products, including ammonia, urea, nitrogen solutions, ammonium nitrate, and nitric acid. The company owns and operates five potash mines in Saskatchewan and one potash mine in New Brunswick. It holds the right to mine 774,861 acres of land in Saskatchewan; and 58,263 acres of land in New Brunswick in Canada. 

Shares have sold off along with the rest of the stocks in the group, and have formed a "bearish flag." Competitor, Mosaic Company (MOS) announced yesterday it will reduce its potash production. Mosaic said in a press release yesterday that it will reduce its potash production in response to current crop nutrient market conditions, primarily related to delayed fertilizer purchases in Brazil and North America. The company added that since it announced guidance in August, domestic and international crop nutrient markets have softened. We expect shares of stocks in the group such as AGU, MOS, and POT to move lower.

 

52-Weeks Trading Range: $21.44 - $37.60

Last Trade: $21.55

 

Buy One October 16th POT $22 Put Option for $1.22

Trade

  • Buy 1 October $22.00 Put at $1.22
  • For a net debit of $1.22

Profit/Loss Analysis

  • Breakeven at $20.78
  • Maximum profit is unbounded
  • Maximum loss is ($122.00) at strike of $22.00

Closing Summary

  • Sold 1 October $22.00 Put at $2.75

Position closed on 10/1/2015 at price of $2.75 with a 125.41% gain in 8 days.

Updates

10/1/2015 1:22:33 PM

We are taking profits on POT October $22 Put options at $2.75

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