BTU - $73.88 Peabody Energy ** Stop loss $68.00 **
Peabody was crushed for missing estimates by a penny and fell from $83.42 to $72.45 in the three days following its earnings. They had a very bullish statement and the selling was entirely overdone. It appeared to be mostly profit taking rather than hostility about the miss. There was also a lot of behind the scenes damage in the oil sector over those same three days.
I am putting BTU back into the lineup as the only play possible who has already announced earnings, already been killed and should not be impacted by hurricane damage claims from other energy stocks.
I would have added an insurance put but the price of the Nov-$70 put at $2.30 was too expensive. That is about what we stand to lose with our stop.
Earnings were OCT-18th
Peabody Energy Corporation (Peabody) is a private-sector coal company in the world. During the year ended December 31, 2004, the Company sold 227.2 million tons of coal. It sells coal to over 300 electricity generating and industrial plants in 16 countries. The Company owns, through its subsidiaries, majority interests in 32 coal operations located throughout all the United States coal producing regions and in Australia. Most of the production in the western United States is low-sulfur coal from the Powder River Basin. In the West, it owns and operates mines in Arizona, Colorado, New Mexico and Wyoming. In the East, it owns and operates mines in Illinois, Indiana, Kentucky and West Virginia. The Company owns four mines in Queensland, Australia. Most of the Australian production is low-sulfur, metallurgical coal. In addition to the mining operations, the Company markets, brokers and trades coal.
MAR 2006 $80 CALL BTU-CP @ $6.70
Entry $73.88 (10/23)