MOS – The Mosaic Company – Shares of the producer and marketer of concentrated phosphate and potash crop nutrients for the global agriculture are trading higher by more than 7.3% to stand at $42.00 by 1:45 pm (ET) inspiring one long-term bullish trader to purchase a plain-vanilla debit call spread in the December contract. The options strategist picked up 5,000 calls at the December $45 strike for an average premium of $3.01 apiece, and sold the same number of calls at the higher December $55 strike for an average premium of $0.88 each. Average net premium paid to establish the spread amounts to $2.13 per contract. Thus, the responsible party is poised to profit should Mosaic’s shares surge 12.2% to surpass the effective breakeven point on the spread at $47.13 by December expiration. The investor stands ready to amass maximum potential profits of $7.87 per contract should the price of the underlying shares jump 30.95% from the current price of $42.00 to exceed $55.00 by expiration day in six months time. The potash producer’s shares last traded above $55.00 back on April 21, 2010.
Affiliation: Interactive Brokers
Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.
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