Stock / Symbol: [private_monthly]Peabody Energy / BTU[/private_monthly]
Price at trade post: $60.64
Option Strategy: diagonal call spread
Trade Note: submitting trade after hours for expected fill at opening of trading Thursday morning. As ususal, use GTC limit order.
Max Risk: $920
Max Reward: $643 or 69% by Jun 2011 expiration
Profit Range: $59.86 +
Max Profit at: $65 by Jun 2011 expiration
Uncalled Return: 17%
Reasoning: This stock boasts strong fundamentals and it looks to have found support at the 200 day average on its chart. We feel that recently announced shortages of coal help to support our thesis. If the stock is trading under $65 by Jun expiration, we'll have taken in an uncalled return of 17% and will then look to sell the July calls.
Trade Details:
[private_monthly]
BTO 2 BTU Sep11 60 Calls
STO -2 BTU Jun11 65 Calls
for a net debit of $4.60 per contract
Requirements
Cost/Proceeds $920.00
Option Requirement $0.00
Total Requirements $920.00
Estimated Commission $12.95
[/private_monthly]
Chart:
[private_monthly]
[/private_monthly]
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