CHK $48.29 -$6.04 - Chesapeake Energy
CHK was stopped out as a play the prior week and we reentered it on Tuesday when it hit our trigger at $51.
The CEO stepped up to the plate on July 16th and bought another 750,000 shares at $57.
Earnings July 31st
Chesapeake Energy Corporation is a producer of natural gas in the United States (first among independents). It owns interests in approximately 38,500 producing oil and natural gas wells that are producing approximately 2.2 billion cubic feet equivalent (bcfe), per day, 92% of which is natural gas. Its operations are located in the Mid-Continent region, which includes Oklahoma, Arkansas, southwestern Kansas and the Texas Panhandle; the Forth Worth Basin in north-central Texas; the Appalachian Basin, principally in West Virginia, eastern Kentucky, eastern Ohio and southern New York; the Permian and Delaware Basins of West Texas and eastern New Mexico; the Ark-La-Tex area of East Texas and northern Louisiana, and the South Texas and Texas Gulf Coast regions. In July 2007, the Company announced the acquisition of Kerr-McGee Tower from Anadarko Petroleum Corporation and subsequent sale of the tower to SandRidge Energy, Inc.
Breakdown trigger: $51 hit 7/22
Position: 2010 $60 LEAP Call WZY-AL @ $8.90
BTU $66.44 +2.34 - Peabody Energy
Peabody reported earnings last week that more than doubled and they had nothing but good things to say in their guidance. They increased the dividend by 6 cents. On Friday Arch Coal and Bucyrus also blew the doors off the earning express. Coal stocks will follow natural gas prices so a continued drop in nat gas could produce weakness in the coal sector.
Earnings July 23rd, more than doubled Q2-2007.
Peabody Energy Corporation (Peabody) is a coal company. During the year ended December 31, 2007, the Company sold 237.8 million tons of coal. It sells coal to over 340 electricity generating and industrial plants in 19 countries. At December 31, 2007, the Company had 9.3 billion tons of proven and probable coal reserves. The Company owns majority interests in 31 coal operations located throughout all the United States coal producing regions and in Australia. In addition, it owns a minority interest in one Venezuelan mine, through a joint venture arrangement. Most of the production in the western United States is low-sulfur coal from the Powder River Basin. Peabody owns and operates six mines in Queensland, Australia, and five mines in New South Wales, Australia. During 2007, the Company generated 89% of its production from non-union mines. On October 31, 2007, Peabody spun-off portions of its Eastern United States Mining operations business segment to form Patriot Coal Corporation.
Breakout trigger: $68 hit 7/21
Position: 2010 $80 LEAP Call LLW-AP, $14.80
USO $99.27 -3.85 - US Oil Fund
The USO is definitely oversold and the 100-day average has been strong support since June-07. $99 is also strong support so I am looking for a rebound here.
United States Oil Fund, LP (USOF) is a commodity pool that issues limited partnership interests or units that may be purchased and sold on the American Stock Exchange (the AMEX). The Company invests in futures contracts for light, sweet crude oil and other types of crude oil, heating oil, gasoline, natural gas and other petroleum-based fuels that are traded on the New York Mercantile Exchange (NYMEX), International Currency Exchange (ICE) Futures or other United States and foreign exchanges (collectively, Oil Futures Contracts). It holds interests in other oil-related investments such as cash-settled options on Oil Futures Contracts, forward oil contracts, and oil-based over-the-counter transactions. As of December 31, 2007, USOF held 4,754 Oil Futures Contracts traded on the NYMEX and 300 Oil Futures Contracts traded on the ICE Futures. The Company operates under full management control of its sole General Partner, Victoria Bay Asset Management, LLC (the General Partner).
I am not using LEAPS because I view this as a short-term trade.
Breakdown trigger: $101, hit 7/23
Position: OCT $110 Call IYS-JF, $6.30