Learn the trade here. Make it on tradeMONSTER

Options Trading News

August 1, 2013  Thu 4:14 AM CT

POT: SEE CHART GET CHAIN FIND STRATEGIES
Potash gave up ground again yesterday, and a large trade is positioning for further losses.

optionMONSTER systems show that a trader sold 10,000 January 25 puts for the bid price $1.13 and, seconds later, bought 5,000 January 28 puts for $2.32. Volume was above open interest in the 25s but below it in the 28s.

The trader could be rolling a short-put position to a lower strike and doubling the size, but it is far more likely that this is a new ratio spread that would generate a maximum profit with POT down around $25 at expiration. That spread cost the trader just $0.06, which is the amount at risk if shares are above $28, so this is a low-cost way of taking a downside position. (See our Education section)

POT fell 8.31 percent to $29 even, continuing to fall with other fertilizer names for the second day in a row. The stock was last down at $25 in March 2009.

More than 179,000 POT options traded yesterday, compared to a daily average of 31,390.
Share this article with your friends


Related Stories

POT

Potash bulls come back for more

September 22, 2014

The fertilizer company has been trending lower since hitting a 52-week high in mid-June but rallied off support about a week ago.

TRADING WEEKLY OPTIONS

The fastest money in the market
View full report »

Premium Services

Free Webinars

How Can Equity Traders Beat the Algos

Education & Strategy

When to go in or out of the money

Some of our subscribers recently asked how to gauge positions that are in or out of the money, so I...

View more education articles »
optionMONSTER stockMONSTER tradeMONSTER