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Options Action: Traders Bet on Potash

Potash (Potash Corp. of Saskatchewan) has been beaten down for months but climbed Wednesday, and options are betting that the stock will go higher.

The Canadian firm may not be a household name, but it's the world's largest fertilizer company. So its stock has understandably gotten some attention lately, as shares are $8 off their recent multi-year low of $54.80 and almost $180 below the 52-week high of $241.62.

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The precipitous fall hasn't escaped the attention of options traders. Today 32,000 calls are trading against 10,000 puts, a ratio that is nearly three times normal as POT trades up 5.1 percent to $62.35. And with premiums running near record highs, OptionMonster's tracking systems show someone big stepping in and buying the March 75-95 bull call spread some 5,000 times.

The net paid for that $20 spread was $4.40, so $2.2 million was plunked down on a bet that POT recovers to $95 or higher by the time the contracts expire on the third Friday of March.
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Potash competes with:

- Mosaic

- Agrium

- Terra Industries

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Jon 'DRJ' Najarian is a professional investor, CNBC contributor, and cofounder of OptionMonster.

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