Initial Transaction - Intrepid Potash (IPI) (7-30-2009)

With the economy beginning to turn around in earnest, and the stock market refusing to go through a correction, I decided to take the plunge and start using some of the 30% cash position I have established over the past week or two. The first position I am going to open is in Intrepid Potash (IPI) which is a small potash supplier (otherwise known as fertilizer) to farmers around the world. Potash prices have plummeted over the past year, and similar to natural gas, are most likely about as low as the can go. Potash is also something which cannot be withheld from farming for more than 18 months without having a bad impact on the crop yields. As a result the possibility for a spike in potash demand is very likely over the next year. The only potential problem with this trade is that the market is due for a correction, and IPI is releasing earnings before expiration. As a result I have decided to collar my position, but still get a hefty return if called at expiration. The performance metrics are below:

7/30/2009 -- Bought 100 IPI @ 26.70
7/30/2009 -- Sold To Open 1 IPI $27 August Call @ 1.54
7/30/2009 -- Bought To Open 1 IPI $22 August Put @ 0.45


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $2561.00

Maximum Risk: 14%
Downside Coverage: 4.08%
Possible Max Upside: 5.23%

Annualized Max Upside: 83.03%