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CF and MOS stocks have generated the worst March returns over the past 10 years

Feb 28, 2018 at 1:40 PM
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The shares of agricultural concerns CF Industries Holdings, Inc. (NYSE:CF) and Mosaic Co (NYSE:MOS) have been strong the past few months, but if recent history is any indicator, the stocks could be poised to pull back in March. In fact, looking back over the past 10 years, CF and MOS stocks have generated the worst monthly returns of all S&P 500 Index (SPX) stocks, according to data from Schaeffer's Senior Quantitative Analyst Rocky White.

CF Stock Struggles in March

CF Industries stock has rocketed more than 55% higher in the past nine months, and notched a two-year high of $44.48 on Monday. In fact, the shares have roughly doubled since their late 2016 lows, with pullbacks contained by their 80-day and 120-day moving averages. At last check, the equity was 1.2% higher on the day, trading at $42.28.

However, CF stock has ended the month of March higher just 20% of the time over the past decade -- the lowest rate of any S&P stock. It's also generated the worst monthly return, down 5.3%, on average. A similar drop next month would put the shares just above $40.

Recent options buyers have been either betting on or hedging against a CF decline. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio of 1.53 is in the 84th percentile of its annual range. This points to a bigger-than-usual appetite for CF Industries long puts over calls lately.

Near-term traders can pick up CF options at a relative bargain, too. The equity's Schaeffer's Volatility Index (SVI) of 38% is still in the bottom quartile of its annual range, suggesting relatively muted volatility expectations are being priced into CF's short-term options.

Mosaic Options Buyers Optimistic

Mosaic stock has surged 40% since touching a 10-year low of $19.23 in early September, and was last seen 0.4% higher at $26.90. From a longer-term perspective, however, MOS has been in a channel of lower highs and lows since early 2011.

What's more, it could be time for a MOS breather again in March, if past is prologue. The security has ended the month higher just four times in 10 years, and averaged a loss of 3.32% -- the second-worst of all SPX stocks, behind CF.

Should the stock once again succumb to seasonal headwinds, an unwinding of optimism in the options pits could exacerbate selling pressure. MOS sports a 10-day call/put volume ratio of 7.99 -- in the 81st percentile of its annual range, implying options buyers have picked up calls over puts at a faster-than-usual clip during the past two weeks, likely to speculate on Mosaic earnings.

 

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