Potash volatility delivers lots of opportunity part 2

Now that didn’t take long.

With this week’s earnings strength in the fertilizer sector, shares of Potash Corp. (POT:TSX) are up about $9 a share in the seven days since I wrote about the attractiveness of a covered-call strategy on the name (see prior post “Potash volatility delivers lots of opportunity” Dec 30-10). Since I rarely get into the weeds of individual stock ideas, I’ve been nervous should this trade not work out.

Would the hate mail start?

Fortunately, the worry is over. Positive economic signs, coupled with great end-market demand indicators, have meant that the trade worked. Potash is up like a champ, and you got your ~30% annualized return — depending upon the option chain you chose — and can now close out the trade.

And I can sleep at night again. Phew.

MRM
(disclosure – I own POT and am short POT calls)