Wednesday, March 16, 2011

Rolled ANR options forward

Rolled the $50 ANR put sold yesterday from March out to April first thing this morning on continued strength in ANR.

Combined that means we have collected $1.75 in cash per share. Of course the portfolio still has a commitment to buy the shares at $50.

Scenario 1: The stock stays above $50 over the next month (8% downside from here)and the portfolio gains 3.5%

Scenario 2: The stock falls below $50 and we are forced to buy a second lot at an effective price of $48.25.

Scenario 3: An opportunity will present itself in the next 5 weeks on a pull back where we can take some of these profits and possible re-invest them in an upside call to try to generate some leveraged, asymmetrical returns on the possibility of an ongoing strong coal market.

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