ELNs : 10.26%, 10% Or 8.3% ? I Picked 8.3% !
Starbucks Corp 10.26% p.a.
2823 HK China ETF 10% p.a.
Potash Corp of Saskatchewan 8.3% p.a.
All at 95% strike for 1 month. (Banker took aboout 1.5%)
Picked Potash for 3 main reasons.
1. Been following the stock for 2 years now and missed the buy at 37 last year. Current stock price 39.25 (-4.13% ytd), 95% would be my buy level of last year.
2. “Potash is one area we all understand because we need fertilizer to feed growing populations. Potash is controlled by a few companies but the real demand over the next decade is going to come from China and India. India has no domestic potash. China is now the largest consumer of potash. The U.S. imports 90% of its potash. ” extracted from interview with Jeb Handwerger of Gold Stock Trades
3. This is a blue blooded blue chip with blue books.
4. Indian demand growing for potash.
It was a lucky thing that I took a look at POT US again all because of a silly typo by the banker which got Dialastrategist and I all excited about Starbucks. She had typed 85% strike for 10.26% which sounded too good to be true.
I would not have done the Starbucks trade because I am bullish Coffee and Starbucks is inversely correlated to coffee prices as a rule, just as Tyson Inc reacts negatively to chicken prices.
2823 HK is another enigma which cracks under scrutiny. PBOC is definite to hike rates, and we just had new property cooling measures. Retail stock interest in China has waned with latest statistics showing new securities trading accounts quite stagnant.
I like 1 month ELNs. It is the sweet spot in vols, as 3 months are usually lower while the 1 week is too short and risky. It also forces me to take a look at stocks I should be following.
Just a trade idea to share.