PotashCorp (POT.TO)

The whole agricultural trade is a macro trade that is for real. The problem is that this is a little pricey given where potash commodity is trading at right now. Waiting for a move in the basic commodity and will own them in the future.

With the Indian contract having been signed and all the bad news behind it, he thinks pricing and planting (volume) are higher in 2010, but not before then. Will probably drift sideways for a while. Prefers Agrium (AGU-T).

Thinks the bad news is already out on this stock. This is the kind of stock that long-term investors like to park their money in. Everybody he talks to are convinced that sales will improve because of food shortages on the horizon.

Great long-term story. If you don't have a position, he wouldn't be too cute about where you get in. Consider how long you want to stay in what would be a reasonable target price and then build a position. You could then buy on down days.

Demand for potash is waning but long-term is not going to disappear forever. Expects this will be an issue for the next quarter or 2. There are many other names in the agricultural space such as Market Vectors Agribusiness ETF (MOO-N).

Short-term there will be anything positive. Have been some pricing cuts in the last few weeks with India and China. 2010 earnings look like they should snap back as global demand starts to increase.

Likes fertilizer. Potash demand has dropped off significantly. Russian producer contracted with India at $460. She thinks pricing will settle in this range, which is a relatively good price. Expects volumes will pick up.

Around $100 it's a good buy. If the last contract price of $460 becomes standard there may not be a huge movement for a while. If you have sales higher than this and an increase in demand, this could have a nice 20%-30% run. Very volatile. If it runs up quickly, consider taking some money off the table.

Stock price went up on rumours that Mosaic (MOS-N) could be taken over by Vale out of Brazil. Has been some movement on potash negotiations with some companies breaking ranks and filing for lower prices. This will affect future prices so their earning power will be quite depressed.

He bought at $95 and wrote a $95 Call Option netting $5. (Does this in New York because Options are more liquid.) (Recent contract prices on potash came in lower than last year's prices, which has been priced into the stock.)

Likes agriculture and both Potash (POT-T) and Agrium (AGU-T). World population will be crossing 7 billion very soon and this is a great export area for North America. Good long-term hold.

Stock was Selling at about $129 in June and caller Bought an October $120/$140 Call for $9. Thinking of Selling a $120 Put for about $9 bringing his costs close to zero. Answer: This is a Call Spread. He actually bought a call at $120 and sold a call at $140. Maximum profit would occur at $140 for the difference of $20 so in effect doubling his $9. If stock declines, both options decline and his $9 position would be worth something like $1-$1.50 today. His Put is a different strategy and actually obliges you to buy the stock at $110. If it stays above $110, you break even. If it declines you end up owning it at $110. You have to be comfortable owning the stock at $110.

Like fertilizer industry. This is the one he prefers because they have the strong asset base holding 75% of the global capacity and 25% production. On his watch list.

Seasonal buying opportunity? Not a big believer in trying to catch seasonal trends. There is a debate as to whether China and India will pay $600 or less for potash. Company reduced production. Also reduced earnings forecast based on lower production. If the price could go below $100 he will buy.

Fertilizer purchases have decreased and they have cut back on production. (For agriculture play that is not as volatile, see Top Picks.)