ANR continued its powerful upward move today. This coal stock is on fire!
(yes, that was a meager attempt at a pun).
Who knows how long this move can go on, but it was time to practice some prudent risk management today and cover the $50 short puts sold last week. Covered at $.25. Trading at $58, there was quite a large margin of safety to hold on to this option until expiration, but with only .5% return left over the next month I just covered the position to free up capital for other potential better uses. This lot of ANR returned 2.9% in just over a week! Of course that pales in comparison to the 10+% the stock has moved in the same time, but this return came with downside risk protection. That protection would have been helpful on the chance the call on this stock was wrong.
The other lot of the trade remains in play. At current prices it would seem like the 19% return somewhat "locked in" via the covered call play will come to pass, but there is a lot of time left in that trade. The plan is just to let this half of the trade run for awhile, but if the coal momentum trade reverses and the stock pulls back perhaps an opportunity to reinvest some of this gain in an upside option trade will present itself.