Fertilizer prices have surged amid the Russia-Ukraine war
Our Schaeffer's Weekly Options Trader subscribers more than tripled their investments with our Mosaic Co (NYSE:MOS) March 11, 2022, 41-strike call recommendation in just under 10 days. Below, we will explore why we initiated a long position on the phosphate and potash miner, and how MOS performed on the charts after we suggested the call option.
When we made our recommendation on Wednesday, Feb. 23, the security had pulled back to the 40-day moving average, which supported the shares in January. This area coincided with the $43.18 mark, which was one and a half times the equity's 52-week closing low. What's more, Mosaic stock boasted a 50% year-over-year return, and the company had added $1 billion to its share buyback program after its earnings report.
While analysts were already mostly optimistic towards the equity, there was still ample room for optimism. At that point, 10 of the 22 analysts in coverage considered MOS a tepid "hold." Plus, short interest had been building since late November, putting short sellers in covering mode.
Mosaic stock's Schaeffer's Volatility Scorecard (SVS) also ranked at a high 76 out of 100, meaning the equity had exceeded option traders' volatility expectations in the past year.
Additional tailwinds followed after fertilizer prices surged amid the Russia-Ukraine war, which led to sanctions on Russia and Belarus, and failed railroad union talks in Canada. Since our recommendation, the shares have bounced off the $56 level to notch a March 21, roughly 11-year high of $67.75. In the last nine months, MOS has added a massive 111.1%.
In our Feb. 23 alert, we recommended that our subscribers buy the March 11, 2022 41-strike call. Exactly six days later, on Feb. 28, we recommended they close half of their position. We sent out a final alert to subscribers to close the last 50% of the position on Friday, March 4, notching a profit of 266%.
