Mosaic (MOS) Gains 3% On Heavy Volume With Bullish Technicals

Posted: Thursday, November 19, 2009 8:40 AM EDT

Mosaic (NYSE: MOS) closed yesterday at $54.44. So far the stock has hit a 52-week low of $21.94 and 52-week high of $59.34. Mosaic stock has been showing support around 52.32 and resistance in the 55.80 range. Technical indicators for the stock are Bullish. MOS appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Mar '10 55 covered call (MOS CK) for a net debit in the $48.54 area. That is also the break even stock price for this trade. This covered call has a 121 day duration, provides 10.84% downside protection and a 13.31% assigned return rate for a 40.15% annualized return rate (comparison purposes only). A lower cost hedged play for this stock would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the MOS Jan '11 30 Call (ZXW AF) and selling the Mar '10 55 call (MOS CK) for a $20.35 debit. The trade has a 121 day life and would provide 7.51% downside protection and a 22.85% assigned return rate for a 69.00% annualized return rate (for comparison purposes only). Mosaic has a current annual dividend yield of 0.40%. [THA-Seven Summits Research]

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