BG

[bigbull]

Im looking at some Bunge calls 08 (LEAPS).

As we all know fertlizer stocks have been on fire of late but BG has lagged the group. It is near ending its consolidation period. Sitting near support at $71 with a double digit growth rate YOY and a surplus in cahs flow, the stock is primed to have a run to par by years end.

Technical Standpoint:
MACD near bottoming out and ready to converge bullish
RSI at 30(oversold)
Slow stochastic bottoming at 30 andmomentum looks to be catching up with the PPS.

[Samantha Stephens]

Hi BigBull,
I don't know anything about fertilizer ... so just looking at the charts ... this looks a bit risky to me. I'm not a good chartists, so I can't really tell you what I'm seeing. But here are a couple observations...

On the Daily and weekly charts, January to current, I'm seeing a double top ... with a breakdown in May.
The monthly chart looks better ... not great. I'm seeing a descending triangle from June through early September ... and a break to the upside in October. That was probably the best time to do a call .... but the volume didn't really confirm the move ... So I probably would have sat on my money. Now you run the risk of it testing the descending triangle.

OK ... so with all that ... I'm not seeing any real enthusiasm for the stock or options. And I'm not seeing any major option freak out in the IV ... I guess I would need more of a real "catalyst".

OK ... that's my two cents.
Good luck!
-Samantha

[akclide]

CAT calls for June look good. I have been buying a lot of calls lately and have done fairly well.It is all under my log under the heading stocks that I may buy tomorrow.Today's pick for options is ALJ.

[Samantha Stephens]

hhhmmmmm ...
As I sit down to dinner of a big plate of CROW ... I'd just like to applaud you BigBull ... I still don't get it ... but I'm willing to admit there must be something that smells pretty nice about your fertilizer trade. Which options did you buy?
-Sam

[bigbull]

Hey Samantha,

First off I would like to  thank you for such kind comments.
As I mentioned earlier, fertilizer stocks have experienced a surplus of money flow into them.  Most of thse stocks have reported dynamite earnings with growth rates way above analysts expectations. As you can imagine these stocks  have been rewarded and it is reflected in their PPS.

What has really drawn people's attention to this sector is the fact that these companies have been able to grow organically which really shows the strong deamand that sector is currently facing.

Fertlizer stocks have been rewarded for numerous reasons but the top 5 reasons are:
1) High demand for corn, soy beans and other commodities have given fertlizer companies an increase in demand and created shortage in supply which obviously translates to a higherand unexpected PPS.
2) The industries average growth rate before this boom was at 3.2%.  The current growth rate for the sector is at 14.5% and yet the valuations for most companies are cheap.
3) Valautions for these companies are way undervalued and big fund managers are recognizing it thus pouring in hefty amount of money into them.
4) Hot money(Momentum money) has been in this sector for a while now and it is likely to ocntniue as companies begin to acquire and merge with other companies in the same sector.
5) Right now the sector is growing at a 14.5% growth rate. It is expectd that the secot wiil grow near 19.7% a year from now with a multuiple of 24 which is reltively cheap if compared to other sectors of the market.

You asked which calls I am in. I got in the Jan 08 75 calls. I usually swing trade but I like this companies overall business model and therefore chose to invest on it. Like I said I can really see this company hitting par ($100) by years end.