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Friday, December 17, 2010

Iron Condor play on POT

A Canadian one this time. When takeover rumors were spread by August this year, Potash of Saskatchewan suddenly sky-rocketed from the 90's to 140's. Since then, it has been pretty much trapped in a sweet range.


Today I want to speculate on this price movement with a neutral approach: an Iron Condor.

Here is my idea:

Buy 1 Jan 130 PUT @1.13 (-$113)
Sell 1 Jan 135 PUT @2.36 (+$236)
Sell 1 Jan 145 CALL @2.57 (+$257)
Buy 1 Jan 150 CALL @1.29 (-$129)



CREDIT RECEIVED AND MAXIMUM PROFIT $251
PROFIT RANGE : POT stays between 132.50 and 147.49 by January 22.
MAXIMUM RISK: $249 if POT goes outside our profit range

So long!
Check out the adjustment made on this trade on December 28

See how this trade played out on January 12, 2011


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