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Trader ups ante in Intrepid Potash

David Russell (david.russell@optionmonster.com)

Intrepid Potash has been running, and the bulls are sticking with the name.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 1,900 March 17 calls for $0.35 to $0.37 and the sale of 1,000 March 16 calls for about $0.84. Volume was below open interest at the lower strike, so it appears an existing position was closed and rolled to the higher strike.

The trader almost doubled the size of the position, which will increase leverage if the fertilizer stock continues to run. He or she also collected a credit of about $15,600, which may have been the initial outlay to buy the 16 calls. (See our Education section for more on how to ride a rally more effectively using options.)

IPI is up 4.88 percent to $16.78 in morning trading. It fell along with other fertilizer stocks in July on fears that the dissolution of a Russian cartel might hurt pricing and spent six months trapped in a tight range.

The stock also gapped lower following a weak earnings report last month but quickly found support at $14 and has been rebounding since.

If today's gain holds, it would represent IPI's first decisive break above its 200-day moving average in more than a year, potentially signaling a bullish shift in sentiment.

Total option volume is more than 5 times greater than average so far today, with calls outnumbering puts by more than 50 to 1. 

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