1/20/2011
MOS@$73.35
Buy 5 to Open June 2011 65 Calls for $12.35
Sell 4 to Open Feb 2011 80 Calls For $1.30
We are adding MOS to the long term Phoenix Portfolio.
There is news that Cargill is splitting it’s 65% stake in MOS. They are doing it for several reasons.
There is a chance for significant rebound on the stock after it has dropped $10 in two days.
We held off on entering the position as we were expecting a slight pullback. Now that it has dropped $10, we are going to enter on a quarter position.
This stock is still very risky and should be analyzed very carefully.
Agressive traders could look at this as a big reverasal or breakout on hourly charts and buy an at the money option.
While putting it into the TPP portfolio we will use a long diagonal to enter the spread.
Keep in mind that volatility has jumped a several “ticks” so we are buying a closer month vs buying the leap.
We are only doing a quarter of a position to enter to make sure a bottom has been put in.
We are using close stop of the bottom of today to stop us out if more information comes out on it.
1/27/2011
MOS@$80.03
Sell to Close the June 65 calls for $17.00.
Buy to Close the Feb 80 calls for $2.90.
This is roughly a 30% profit in 7 days.
We’ve decided to close out the recently added MOS position. This is another position that’s worked out “too well, too fast” from our perspective.
We believe that it has more upside so aggressive investors may choose to remain in this position “as is”. On the other hand, the nice return in < 1 week and the stock’s volatility are things that we’ll be happy to take and take a breather from respectively.
As with many other positions, we’ll watch it and look for another entry point if it provides one.
The market “ramp job” continues in the face of even more disappointing information on durable goods and unemployment claims.
We’re not a Primary Dealer here at The Phoenix Portfolio so we aren’t privy to the exact plans of “the powers that be” that continue to keep their foot on the market’s acclerator. We’ve recently encountered a half dozen commentaries by market technicians that average 40 years of market watching experience and the consensus is: “never seen anything like this in all my years. No real breaks, no real pauses, certainly no healthy corrections.”
We’re not baffled by what the markets are doing at all, but we’re amazed that some people believe that this is actually “natural” action.
If there ever is a correction we fear that it could be reminiscent of the so-called “flash crash” and that the exits will effectively have been blocked off until nearly 10% has been clipped from the major indices.
In short, when you make a good year’s return in a week and the underpinnings of a market are what we have today, we believe that you take it.
The stock is moving around so you may have to adjust these numbers slightly.
