Wednesday October 28, 01:43 PM
STOCKS NEWS US-Credit Suisse suggests Monsanto call spread
Stocks on the move
Real (Frankfurt: BJU.F - news) -time Equity news
U.S. stock market report
0919 ET 28Oct2009 Credit Suisse
recommends Monsanto call spread
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A call spread in biotech seed maker Monsanto Co looks attractive to
capture leveraged long exposure, wrote Credit Suisse derivatives strategist
Sveinn Palsson in a note. He recommends buying an April 2010 $75/$85 call
spread for $2.85. The trade benefits from the low implied volatility and the
flat skew, which is near its two-year low. The 10-point call spread has a
leverage ratio of 3.51-to-1, with the downside risk limited to the premium
paid, he said. Monsanto shares fell about 6 percent on Monday amid news it was
offering lower-than-expected pricing for its high-tech corn seed. After the
drop, the stock looks attractive as the sell-off sent it just shy of its
one-year strong support line, he said.
Also, Credit Suisse agricultural chemicals analyst Elaine Yip believes that
with its large presence and leading technology, Monsanto offers a good way to
invest in the long-term growth of agriculture biotech.
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