Started a new long in MOS on Friday’s flush and I’ll be adding to it through next week.
Structure: laddering short puts across the May 1 through May 29 expirations, working the $22 and $22.50 strikes for varied credit. Blended breakeven settles into the low-to-mid $21s depending on how the fills come in — either way, that zone lines up cleanly w/the lower rail of the multi-year channel I’ve traded this name in before.
Setup I’m working with:
– Weekly chart printing a textbook double bottom off the channel floor
– Daily 50/100 SMA cross firmed up in Feb
– RSI mid-40s, plenty of room before anything stretched – Stock traded into the low-30s just weeks ago, so $36.88 PT off the channel work isn’t a stretch… it’s a retest of recent range
– 14.7x trailing, ~11x forward, EV/EBITDA around 5.4, ~3.5% yield while you wait
Bear case I’m respecting… though I read it differently: UBS, BofA, Barclays, and JPM have all cut in the last six weeks and the street target now sits below spot near $29.88. To me that’s capitulation, not new information. The desks are downgrading into a multi-year base after the chart already did the work. Ag inputs have been in the penalty box for a while, and if potash benchmarks roll again on the next India/China contract settlement, $22 could get tested for real and I take assignment. I’m fine owning shares down there given where this thing has historically based.
Risk/reward: collect premium in the meantime, get long at a level the chart and the fundamentals both support, or own a cash-flowing ag major at a multi-year structural low. Not calling a bottom… calling a level worth defending.
NFA. Please do your own work before putting capital at risk