NEW DIRECTIONAL PUT PLAYS

The Mosaic Co. - MOS - close: 52.96 change: -0.88

Stop Loss: 55.25
Target(s): 47.50
Current Option Gain/Loss: + 0.0%
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
MOS is a specialty chemical company but it's probably best known for being in the phosphate-fertilizer industry. The company recently reported earnings in late March and missed estimates by 10 cents. This helped kick start the current reversal lower. Two trading days ago MOS broke down under support near $55.00 and its 100-dma.

There is potential support at $50.00 but I suspect we could see MOS fall into the $47.50-45.00 zone. I am suggesting small bearish put positions at the open on Monday with an exit target at $47.50. FYI: The Point & Figure chart for MOS is bearish with a $46 target.

NOTE: The stock market, and MOS, are likely to gap open lower on Monday. The options will gap higher in response.

open small positions on Monday morning

- Suggested Positions -

buy the April $50 PUT (MOS1221P50) current ask $0.29

Annotated Chart:

Entry on April xx at $ xx.xx
Earnings Date 03/28/12 missed by 10 cents
Average Daily Volume = 5.2 million
Listed on April 07, 2012


Weight Watchers Intl. - WTW - close: 76.16 change: -0.15

Stop Loss: 79.25
Target(s): 70.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
It looks like shares of WTW have topped out and reversed near resistance a couple of weeks ago. An oversold bounce on Tuesday failed at $80.00. Now shares are back under technical support at the 50-dma. There doesn't appear to be any support until the $70.00 level (or the 100-dma).

I am suggesting we open small bearish positions at the open on Monday and target a drop to $70.50. We'll use a stop loss at $79.25. I want to warn you that WTW could be prone to short squeezes with short interest at 18.5% of the small 35 million-share float but I'm not expecting one with the market poised to drop on Monday.

NOTE: The stock market, and WTW, are likely to gap open lower on Monday. The options will gap higher in response.

open small positions on Monday morning

- Suggested Positions -

buy the Apr $75 PUT (WTW1221P75) current ask $1.75

Annotated Chart:

Entry on April xx at $ xx.xx
Earnings Date 05/03/12 (unconfirmed)
Average Daily Volume = 1.1 million
Listed on April 07, 2012