Mosaic (MOS) – Bullish Call Butterfly Into Tomorrow’s Earnings

The Mosaic Company (MOS, $59.19, up $0.58) is a global producer and marketer of crop nutrition. The company will be releasing a quarterly earnings report tomorrow morning, Tuesday, before the market opens. Mosaic has missed earnings three out of the five last quarters, beating estimates twice.

The last two missed earnings, Q3 and Q4, missed by about 7% and 9% respectively and the stock adjusted negatively by $2.93 (5%) and $0.59 (1%) respectively. Moves are averaging around 5% for the past five quarters. Revenue has beat estimates in three out of four of 2012 quarterly reports. Annual revenue is expected to stay flat in the 2013 fiscal year, but gain 300 million by 2014.

Trade Recommendation: Buy the Oct 5th Wkly 60 – 62.50 – 65 Call Butterfly for a $0.35 debit.

This is a purchase of one 60 call, the sale of two 62.50 calls and the purchase of one 65 strike call option. The keys to the long butterfly are that there are no short options (long two and short two) and the maximum gain is if we reach the middle strike price – 62.50 in this case.

Risk: $35 per each butterfly

Reward: $215 per each butterfly

Breakeven: $60.35 and $64.65

Notes: The stock has moved over 5% three of the last four quarters and this trade has a great risk reward setup.


Andrew Keene


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