BTU - $76.60 Peabody Energy ** Stop loss $71.00 **
Peabody had another volatile week with a $9 range. Support appears to be holding at $73 but I raised the stop just in case another build in gas storage sends coal lower. BTU reported earnings that doubled the prior year but missed estimates by a penny. They were punished for that on the 19th and recovered back to the top of their range at $82. A drop in gas prices this week and likely end of year fund selling took them back to $73 but there was a strong buy on the dip. The risk here is gas prices and weather. Puts are still too expensive as an insurance option.
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)
ECA - $45.70 - Encana ** Stopped $45.00 **
Encana disappointed when they announced they were more than 80% hedged and were not taking advantage of higher gas prices. After four weeks of range bound trading the range broke to the downside and the outlook is for more of the same. Investors want aggressive plays and are not satisfied with boring.
Earnings were: Oct 26th
EnCana Corporation is an independent crude oil and natural gas exploration and production company. Its key landholdings are in western Canada, the United States Rocky Mountains, Ecuador, the United Kingdom central North Sea, offshore Canada's East Coast and the Gulf of Mexico. EnCana explores for, produces and markets natural gas, crude oil and natural gas liquids (NGLs) in Canada and the United States. EnCana is also engaged in exploration and production activities internationally including production from Ecuador and the United Kingdom central North Sea. EnCana has interests in midstream operations and assets, including natural gas storage, NGLs gathering and processing facilities, power plants and pipelines.
APR 2006 $55 CALL ECA-DK @ $4.80, exit $3.70, 10/27 -$1.10
Entry $48.50 (10/13)