ANR bounced back to $57 on Thursday.
FYI, the stock has traded between $51 to $61 over the last 6 weeks without any material change in the fortunes of the company.
Who really knows what has caused this latest bounce back. My guess is it is mostly due to either the Goldman downgrade of the sector causing an overreaction and/or that the dollar weakening is lifting all commodity stocks.
Setting the noise aside, I went back to review my original thesis for buying in this stock in Feb. That thesis was that ANR got overly punished by the market when it bid for Massey and could trade back over $60 before too long. I still think that is true. Further, with the shareholder votes on that deal scheduled for June 1, I'm thinking management will want to try to minimize any surprises or noise before then (including during the May 3 earnings announcement). Hopefully, that somewhat minimizes the short-term, company specific, downside risks.
The potential for less downside risk and the high implied volatility on the options, presented an opportunity to pursue a covered call strategy .....once again. Late Thursday, I sold one lot of June $60 covered calls for $1.91 (3+%) net of commissions. Implied volatility was about 39 at the time.
At the macro level that means
Downside - The current and past covered call premiums collected means the BEP (break even point) for this lot is down to about $51.40 or 10% downside protection from here.
Upside - If the stock ends up over the $60 strike (about 5% up from here) by June expiration, and profits from options and capital gains will be capped at around 15% in total
Or Sideways - things will continue to be volatile and more opportunities to harvest some option returns will present themselves.