Shares recently came under pressure after Russian producer OAO Uralkali announced it would form its own business, thus breaking up 1 of the 2 largest potash cartels in the world. The ripple effect spread to the fertilizer industry, with analysts calls for a 20 to 25 percent drop in potash prices. Following the news, POT share gapped down over $8 to open the July 30 session below $30. While shares are currently down over 28 percent on the year, we expect POT shares to stabilize in the near-term, regardless of the validity of current fertilizer price projections.
Rangebound: Iron Condor:
Selling the POT Sep 28-27 Bull Put Spread and Sell the 31-32 Bear Call Spread for $.36 total
Risk; $64 per 1 lot
Reward: $36 per 1 lot
Breakeven: $27.64 and $31.36
Greeks of this Trade:
Delta: Short
Gamma: Short
Theta: Long
Vega: Short