Mosaic Stock Ready to Piece Together Another Rebound

Digging into why Mosaic might be a good pick for options bulls

Deputy Editor
Oct 6, 2020 at 11:59 AM
facebook twitter linkedin


Fertilizer manufacturer Mosaic Co (NYSE:MOS) has spent several months consolidating just below the $19 level, with its last breakout in mid-September resulting in a six-month high of $20.03. This week, MOS has once again shattered resistance at the $19 mark, and is well on its way to toppling its six-month peak. Plus, a historically bullish trendline just flashed on the charts, which could put even more wind at the equity's back. 

Specifically, MOS just pulled back to its 40-day moving average, after a lengthy period above the trendline. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, three similar pullbacks have occurred over the last three years. One month after each of these signals, the security was higher, averaging a near 16% return. From its current perch at $19.62, a move of this magnitude would put MOS at $22.76 -- beyond its pre-pandemic, 12-month highs. 

MOS Oct 6

While the majority of analysts covering MOS are bullish, there is still room for upgrades, which could propel the stock even higher. Seven currently call it a "strong buy," while five say "hold." Plus, the 12-month consensus price target of $20.79 is an underwhelming 6.1% premium to current levels. 

Options bulls seem to be fully on board, though. This is per MOS' 10-day call/put volume ratio of 20.08 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than 94% of readings from the past year. Echoing this, Mosaic stock's Schaeffer's put/call open interest ratio (SOIR) of 0.42 ranks in the extremely low 2nd percentile of its 12-month range. This suggests short-term option traders have rarely been more call-heavy. 

That being said, options could be the way to go, for those looking to speculate on Mosaic's short-term trajectory. The security's Shaeffer's  Volatility Index (SVI) of 51% sits in the relatively low 10th percentile of its annual range, implying options players are pricing in low volatility expectations at the moment. 


A Schaeffer's exclusive!

The Expert's Guide

Access your FREE trading earnings guide for Q3 before it's too late!


  
 
Special Offers from Schaeffer's Trading Partners