Sarah Wasserman (swasserman@sir-inc.com) Potash producer The Mosaic Company (MOS) rallied to a 52-week peak of $75.70 on Wednesday, breaking briefly above the $75 level for the first time since September 2008. Prior to Wednesday, the stock had spent the past several weeks hovering around $70.
This technical feat comes ahead of the equity's turn in the earnings spotlight, which is slated for Tuesday, Jan. 4. Analysts are expecting MOS to post a profit of 91 cents per share for the first quarter. However, the company doesn't have the best track record in the earnings spotlight, falling short of the consensus estimate in three of the past four reporting periods.
Call players rushed to MOS on Wednesday, with 38,000 contracts crossing the tape -- more than triple the fertilizer firm's expected single-session call volume of just 12,000 contracts.
However, this heavy call activity was not necessarily bullish. Late Wednesday morning, 2,500 March 75 calls, marked "spread," crossed the tape at the bid price, while 2,500 March 90 calls, also designated "spread," traded at the ask price. Open interest increased substantially at each strike overnight, confirming the addition of fresh positions. By initiating this short call spread, the trader is ultimately betting that MOS will remain beneath the $75 level over the next several months.
In fact, MOS did pull back on Wednesday after hitting its new high, closing the session at $74.80.
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