Get back into POT

June 30th, 2008 | Posted in Investing, Stocks

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It is time to get back into Potash. Potash has had a nice run in the past few days, but there is more to come. I’ve had quite a good track record trading this stock and hopefully you’ve been following my trades and making money. A few posts ago I told you to go short and then exit. Now I’m telling you to get back in long for what I think will be a 2 week run to $260.

I Expect POT to hit $240 by Wednesday and $260 within 2 weeks. The DOW is points away from confirming a bear market. It sort of like a recession. You feel the pain long before you get confirmation. Stocks that work should continue to work. Stocks that are for discretionary goods should continue to be battered. Driven by fundamentals the ag plays should do well, particularly the fertilizer stocks. POT is the best valued in my opinion, but feel free to do your research and look at Agrium (AGU) and others. Monsanto could be another good Ag play if you want some further diversification in the ag space.

Below are the positions I’ve opened:

  • Dec 08 $210 POT Calls @ $40.00
  • Dec 08 $165 POT Calls @ $72.60

Both positions are pleasantly to the upside. There is much more room. I would build up your position at this level as I see a $30 run from this level.

Pot ready to rise

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5 Comments

  1. 1
    Baldeep // June 30th, 2008 at 2:13 pm

    Dax, I’ve been reading your blog for a few weeks and notice that you always get into ITM calls/puts. Why is that so despite these being very expensive? ( I’m a new investor and trying to understand your trading strategy a bit better ).

  2. 2
    HongH // July 1st, 2008 at 7:35 am

    Been following your POT trades for a while and they are work well.

    However this time I feel a bit uneasy, how far it goes down before you sell?

  3. 3
    Dax // July 1st, 2008 at 9:05 pm

    @HongH - I keep about 20% on the downside on my trades. I trade on technicals, but sometimes I may get long or short a little too early. For example, my last short position was a little bit premature. I did make profit on the trade, but over a 2 day span my position went negative before the stock eventually made my anticipated move. Had I had a low stop-loss threshold I would’ve sold at a loss instead of holding for a few days and selling at a profit.

  4. 4
    Dax // July 1st, 2008 at 10:49 pm

    @Baldeep - I just posted a response to your question. By the way I’m not afraid of POT’s price action. The volume is average. If I see high volume and price falling then I may begin to worry about capitulation. Right now I’m inclined to wait for the upside that will come after this consolidation.

  5. 5
    Baldeep // July 2nd, 2008 at 7:31 am

    Thanks Dax !

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