Our Mosaic (MOS) put is in the money. I am recommending we close the position now rather than holding through today’s Federal Reserve announcement, which could prompt further short-term selling.
The stock is down 40% since we entered the position in April, when fertilizer prices spiked to record levels. As high prices weakened demand, fertilizer prices dropped, resulting in a supply glut. Last week, Mosaic announced it was temporarily cutting production at one of its mines due to slower-than-expected demand.
Management expects demand to recover in 2023, but with no potential upside catalysts on the horizon, the stock could be dead money for some time. Therefore, it’s time to book the loss and put our capital to better use elsewhere in the new year.
If you decide to stick with the current position, please do not hesitate to email me with questions.
Current Stock Price: $46.45
Net Debit: $3.41
Action: Buy to close the MOS Dec Monthly (12/16) 48 Put for around $1.83, but adjust as needed to close today
Loss: $5.24, or $524 per contract