Put Players Blast Mosaic Co (MOS) After Vale Deal

Mosaic Co (NYSE:MOS) said it will purchase Vale SA's (ADR) (NYSE:VALE) fertilizer division, sending MOS stock lower

Dec 19, 2016 at 2:46 PM
facebook twitter linkedin

Shares of Mosaic Co (NYSE:MOS) are selling off today, after the fertilizer firm announced a $2.5 billion M&A deal with sector peer Vale SA (ADR) (NYSE:VALE). At last check, MOS stock was trading down 6.4% at $27.67, and put volume is accelerated. Specifically, 6,616 MOS puts have traded so far -- two times what's typically seen at this point in the day, and outstripping the number of calls on the tape.

Today's faster-than-usual put volume just echoes the withstanding trend seen in MOS' options pits, though. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 50-day put/call volume ratio of 1.09 ranks in the 86th annual percentile. Simply stated, puts have been bought to open over calls at a quicker-than-typical pace in recent months.

This skepticism is seen outside of the options pits, too. Although short interest is down nearly 19% since hitting a record peak in mid-October, it still accounts for a healthy 10.7% of the equity's available float -- or 8.2 times the average pace of trading. Plus, 12 of 13 analysts maintain a "hold" or worse rating, while the average 12-month price target of $26.26 stands at a discount to current trading levels.

Granted, the stock has done little on the charts to warrant optimism from traders and analysts. In fact, MOS has repeatedly run into resistance from the overhead $31 mark, and despite hitting an annual high of $31.54 as recently as Dec. 9, the shares are up just 0.5% on the year. Plus, today's sell-off has brought Mosaic Co (NYSE:MOS) back below its 320-day moving average -- a trendline that contained the stock in the first half of 2015, but which MOS had previously managed to trade north of in December.

MOS daily since february 2015

Sign up now for Schaeffer's Market Recap to get all the day's big stock movers, must-know technical levels, and top economic stories straight to your inbox.



These investors are using the market's volatility to their advantage and scoring triple-digit gains on many of their trades.

Even in today's sideways bear market, this trading strategy has continued to provide consistency and profitability to a small group of investors. By using this approach, these traders are removing directional risk and still hitting triple-digit returns. If you want access to this strategy, and lower risk with higher returns sounds good to you, then don't wait another minute.

Join us now to receive our next trades the moment they come out!


Common mistakes options traders make


Special Offers from Schaeffer's Trading Partners