Mosaic (MOS) 10/14/09 PriceWatch Alert Technicals Showing Bearish

Posted: Wednesday, October 14, 2009 8:25 AM EDT

Mosaic (NYSE: MOS) closed yesterday at $49.05. 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 47.91 and resistance in the 50.23 range. Technical indicators for the stock are Bearish. MOS appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jan '10 50 covered call (MOS AJ) for a net debit in the $44.85 area. That is also the break even stock price for this trade. This covered call has a 94 day duration, provides 8.56% downside protection and an 11.48% assigned return rate for a 44.59% 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 17.50 Call (ZXW AW) and selling the Jan '10 50 call (MOS AJ) for a $28.00 debit. The trade has a 94 day life and would provide 7.24% downside protection and a 16.07% assigned return rate for a 62.00% annualized return rate (for comparison purposes only). Mosaic has a current annual dividend yield of 0.41%. [WBA-Seven Summits Research]

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