The Money Tree

Safely Generating Income in Retirement

Posts Tagged ‘MOS’

New Trade – POT

Posted by mounddweller on July 30, 2013

Fellow Traders,


My trade today in POT was a first for Troy’s Money Tree.  Why is that, you ask?  Well, because I ended up mimicking a day-trader.  By that I mean that I was in and out of the trade in just a few short hours.


I have been keeping an eye on POT for the past several days.  As a matter of fact I had actually tried to place a trade in it yesterday but thankfully never got filled.  Specifically, I had placed an order to STO AUG $36 puts at $0.51 when it was down around its lows of the day.

This morning before the market opened I noticed the news about Russia’s Uralkali Group, the world’s largest fertilizer producer, pulling out of a cartel and vowing to ramp up production.  I then checked pre-market prices for all of the major fertilizer producers.  As expected all, including POT, were going to open significantly lower.

After the market opened I looked at various expiration months.  The market was moving so fast there were no options available for AUG expiration at POT’s opening price.  I then decided to look at the JAN14 expiration.  By keeping an eye on the fast stochastics and the William’s R technical indicators I was able time my entry at close to the daily low for POT.  With POT trading at $29.15 I sold the JAN14 $28 puts for $2.58.

My plan upon entering the trade was to watch for the subsequent bounce and close the trade when I could buy back the puts at $1.29 or better (50% of the entry price).  I had anticipated this could take a month or two to achieve.

I checked in on POT’s price periodically throughout the day (unfortunately, I still have a day job).  I wanted to be ready to bail out quickly if I had mistimed my entry and the stock continued to fall.  After a late lunch I noticed that POT was back over $30 and moving steadily higher.  I started paying closer attention to it and shortly after 2 pm CT I decided it might make sense to alter my original trading plan.  With the JAN $28 put trading at just under $2.00 I realized I could buy to close my position and achieve a 2% ROIC in about 5 hours of elapsed time.

I continued to closely watch the trade.  Like in the morning when I opened the trade I was watching the fast stochastics and William’s R to time my exit.  When the stock began to pull away from the upper Bollinger Band that’s when I made my move.  With POT trading at $31.65 I bought to close my JAN14 $28 puts at $1.71.

My ROIC on this trade, net of commissions, was 2.95%!  The unrealistic annualized return is an astronomical 1075%.

My plan now is to continue to watch POT and the other fertilizer manufacturers like MOS, IPI, and AGU to see if I can detect a floor in the pricing.  At that point I’ll look to sell another round of puts for either the AUG or SEP expiration depending on how many days remain to expiration.

I’ll be back later this week with a summary of my July results.  It’s been a good month.






Posted in Troy's New Picks! | Tagged: , , , , | 1 Comment »

Weekly NP Strategy – MAR30 Expiration

Posted by mounddweller on March 22, 2012

Fellow Traders,

The Weekly NP Strategy has 42 possible trades this week.  As usual you can find them here on the Yahoo group board:

Out of the 42 possibilities I found three that I liked.  First up is Mosaic Company (MOS).  The Mosaic Company engages in the production and marketing of concentrated phosphate- and potash-based crop nutrients for the agriculture industry worldwide.  MOS closed today at $56.27.  The strike price of the put we’re interested in is $52.50.   While this is somewhat higher than its 52-wk low of $44.86 I still like the trade.  Here’s why, looking at the one year chart it appears that MOS has support at $55.  It has bounced off of this level multiple times in both February and March.  The premium on the MAR30 $52.50 put is $0.27 giving a ROIC of 0.51% for the 8-day holding period.

The next two trades that interested me are in the same stock, Research in Motion (RIMM).  Research In Motion Limited (RIM) designs, manufactures, and markets wireless solutions for the worldwide mobile communications market.  I’m sure most of you are aware that RIMM has been taken to the cleaners by Apple and the iPhone.  As a matter of fact I just saw a headline today that iPhone sales had overtaken Blackberry in its home country of Canada.

So, why would I consider a trade in RIMM.  Well, primarily because both of the strike prices I’m interested in ($11 and $12) are below the lows encountered late last year when everyone was trying to get out of RIMM as fast as possible.   Back on December 20th RIMM closed at $12.52.  It retested those lows earlier this month closing at $12.90 on March 7th.

The $12 strike price has a premium of $0.25 indicating a potential ROIC of 2.08%.  The $11 strike price has a premium of $0.11.  Yield is an even 1.00%.

Both RIMM and MOS are debt free and trade at reasonable multiples to current and prospective earnings.  RIMM is especially cheap trading at < 4x current earnings and just over 4x prospective earnings.

That’s it for this week.  Best of luck trading in the coming weeks.  Be safe…it could be a bumpy ride for awhile.




Posted in Weekly NP Strategy | Tagged: , , | 2 Comments »