Potash (POT) 2/9/10 PriceWatch Alert Support Down To $98.48

Posted: Tuesday, February 09, 2010 8:44 AM EDT
By: Market Intelligence Center Staff

Potash (NYSE: POT) closed yesterday at $101.51. So far the stock has hit a 52-week low of $63.65 and 52-week high of $126.47. Potash stock has been showing support around 98.48 and resistance in the 107.14 range. Technical indicators for the stock are Bearish and S&P gives POT a neutral 3 STAR (out of 5) hold rating. POT appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Jun '10 100 covered call for a net debit in the $89.66 area. That is also the break even stock price for this trade. This covered call has a 130 day duration, provides 11.67% downside protection and an 11.53% assigned return rate for a 32.38% 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 POT Jan '11 65 Call and selling the Jun '10 100 call for a $28.15 debit. The trade has a 130 day life and would provide 8.24% downside protection and a 24.33% assigned return rate for a 68.00% annualized return rate (for comparison purposes only). Potash has a current annual dividend yield of 0.39%. [ATU-Seven Summits Research]