Trading ANR Again

In the recent past, CCI successfully traded coal stock ANR.  The core of the rational for putting some money in this stock has been that

• coal seems like a resource that will continue to be a critical
• ANR might have been overly punished by noise and uncertainty from its acquisition of  Massey
• with a forward P/E of single digits (now near 7) it is  not overly expensive.  

Earlier this week, for better or worse,  Crammer talked up ANR. It got a short term bounce and pulled back a little today.
 Crammer calls ANR "top dog" in coal space.


Today CCI decided to re-initiate a trade in ANR.  Wiht ANR trading around $44.35 sold one lot of Aug $41 puts for $1.11 net of commissions.   Implied vol remains high at around 45 at the time of the trade. A catalyst in the form of a earnings call is schedule for Aug 3. A few scenarios

Worse case - the stock falls over $3 (about 8%) and CCI will be long a lot at an effective price of around $40.  In this case, volatility will even likely be higher and we would likely sell calls against the position to try to recover any losses.

Best case - Stock stays above $41 and the portfolio makes 2.5+% in option premium over 5 weeks.

Most likely case - Any positive drift in the stock going into earnings provides the opportunity to scalp a smaller profits in a shorter period of time.