Potash Corporation Stock Options Sizzle as Shares Soar

Potash Corporation shares are bouncing sharply as Belarus nears a compromise with Uralkali

Mar 9, 2017 at 1:56 PM
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Shares of fertilizer firm Potash Corporation of Saskatchewan (USA) (NYSE:POT) are flying today amid sector tailwinds. Triggering the gains are increasing prospects of less competition in the market, thanks to a potential compromise between Belarus and Russian potash producer Uralkali. With the shares sharply higher, POT stock options are being exchanged at a feverish pace.

At last check, POT call options are crossing at six times the average intraday clip, and more than nine times the rate of puts. In fact, call volume is on pace to finish in the 96th percentile of its annual range. In the lead are the March and April 18 strikes, where buy-to-open activity is likely transpiring. In other words, options traders are counting on POT stock muscling atop $18 by the respective expiration dates, at the close next Friday and Friday, April 21.

Today's accelerated bias toward calls marks a departure from the recent trend toward puts. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), POT has amassed a 10-day put/call volume ratio of 0.58 -- in the bearishly skewed 87th percentile of its annual range.

Technically speaking, that skepticism is well-deserved. Shares of POT recently broke below a series of higher lows dating back to November, and have underperformed the broader S&P 500 Index (SPX) by more than 18 percentage points in the past three months. In fact, on a year-over-year basis, the stock is in the red, while the broader market flirts with all-time highs.

That said, today is a different story. After settling in oversold territory yesterday, with a 14-day Relative Strength Index (RSI) of 28, Potash Corporation of Saskatchewan (USA) (NYSE:POT) stock is on track to take back its 10-day moving average for the first time since mid-February, up 3.5% at $17.50.

potash corporation stock chart

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