NEW DIRECTIONAL CALL PLAYS

Potasch Corp. of Saskatchewan - POT - close: 35.72 change: +0.29

Stop Loss: 34.45
Target(s): to be determined
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 months
New Positions: Yes, see below

Company Description

Why We Like It:
POT is in the basic materials sector. They produce fertilizers and agricultural chemicals. The last couple of years have probably been frustrating for long-term investors in POT. The stock has been trending lower. The potash market had a mild heart attack in July 2013 when OAO Uralkali, a Russian potash producer, and one of the largest in the world, announced they were leaving a Belarusian potash cartel. Uralkali's plan looked like they would try and undercut the competition on price and make it up on volume.

Uralkali's announcement sent shares of POT crashing from $38 to $29 overnight. It's been a long slow climb higher since then for POT. Shares are just now testing resistance in the $36.00 area.

Uralkali's move did impact potash prices, which were depressed last year. Ten months down the road and Uralkali might be thinking about rejoining the cartel and prices for potash seem to have bottomed.

POT just reported earnings on April 24th. The results of 38 cents a share were three cent better than expected. Revenues plunged -20% for the quarter to $1.68 billion but that was better than Wall Street expected. POT's management did lower their guidance for the second quarter but they reaffirmed their 2014 guidance.

We think POT is a bullish candidate for a few reasons. On top of a potential bottom in potash prices the geopolitical tensions with Russia could be a significant issue. If Russia continues to press the West the U.S. and Europe could launch tougher sanctions on the country. These tougher sanctions could impact potash sales for Uralkali and that could mean more business for its North American competitors like POT.

Another reason POT could draw investors interest is growing speculation that BHP may try and buy the company again. Back in 2010 BHP tried to buy POT for about $38.5 billion (that's 28% higher than POT's current market value). Eventually the Canadian government blocked the deal. It looks like politics have changed and rumors are growing that BHP could make another takeover attempt.

The March high in POT's share price was $36.29. We are suggesting a trigger to buy calls at $36.50. We're not setting an exit target just yet. We'll start with a stop at $34.45.

FYI: rival potash producers Agrium (AGU) and Mosaic (MOS) both report earnings on May 6th. Their results and guidance could influence trading in POT.

Trigger @ $36.50

- Suggested Positions -

Buy the Sept $35 call (POT1420i35) current ask $2.28

Annotated Chart:

Weekly Chart:

Entry on April -- at $---.--
Average Daily Volume = 5.0 million
Listed on April 26, 2014



NEW DIRECTIONAL PUT PLAYS

QIWI Plc - QIWI - close: 27.55 change: -1.79

Stop Loss: 30.25
Target(s): to be determined
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
QIWI is in the financial sector. The company operates an electronic payments systems throughout the Russian Federation, the U.S. and in the U.A.E. The idea behind this trade is pretty simple. The U.S. and Europe have already enacted some financial sanctions again Russia for its invasion of Crimea and now they're about to launch tougher sanctions as Russia escalates tensions with Ukraine.

QIWI is in the financial sector and sanctions from the West could definitely hurt its international business. Shares are in a bearish trend of lower highs and lower lows and recently broke support near $30.00. The stock is volatile so traders should consider this a more aggressive, higher-risk trade. We're suggesting new positions now at the opening bell on Monday. Nimble traders could instead watch for a possible bounce into the $29-30 zone as an alternative entry point. We're starting this trade with a stop loss at $30.25. I suggest small positions to limit risk.

We're not setting an exit target yet but the P&F chart for QIWI is bearish with a $19 target.

*Small Positions*

- Suggested Positions -

Buy the Jun $25 PUT (QIWI1421R25) current ask $2.40

Annotated Chart:

Weekly Chart:

Entry on April -- at $---.--
Average Daily Volume = 657 thousand
Listed on April 26, 2014