Wednesday, November 30, 2011

ANR - Let's Try That Again

Alpha Natural Resources (ANR) was up a "modest" 14 % today to nearly $24.  Of course that is after an even larger percentage fall the weeks prior. Yet another example of "rationale/efficient" markets.

Readers will recall our last activity in this stock was to establish a Nov $23-$25 1 by 2 ratio call spread for no cost against one of the lots of stock held in the account.  If you need  a refresher on that activity it is documented here.   The stock had bounced back nicely towards my price target of $25-$26.  It looked like this strategy had worked perfectly.  However, the stock reversed right before expiration,  and the trade expired with no impact on the p/l.   Rats.

With today's gain and my calculations of adjusted, tangible book value still over $25, CCI put on the same trade for December options.  Specifically, bought 1 lot of Dec $23 calls and sold 2 lots of Dec $25 calls for a net debit of $.09 after commissions.   Obviously we need the stock to stay over $23 to make money and the best case is for it to climb over $25.    With the way this stock moves that can happen very quickly.

Stay tuned.

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