A position was established in Alpha Natural Resources, a appalachian coal supplier which has recently become more diversified by acquiring Foundation Coal, a western US coal supplier. This acquisition allows ANR to become less dependent on metallurgical coal, which has been its main product, and is used for steel production. Foundation Coal is focused on thermal coal which is used for power generation. After hitting a peak of over $100 per share last year, the stock has traded between about $15 and $20 until recently breaking out up to the $30 mark. This position is most likely going to be a longer term covered call position in the portfolio as opposed to one that I expect to be called at expiration. I also expect the stock to pull back a bit from its recent highs, and so I have also purchased a put to cover my downside. The purchase info is below:
5/20/2009 -- Bought 100 ANR @ 29.26
5/20/2009 -- Sold To Open 1 ANR June $32.50 Call @ 1.24
5/20/2009 -- Bought To Open 1 ANR June $20 Put @ .3
The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $2926.00
Downside Coverage: 3.2%
Possible Max Upside: 14.76%
Annualized Max Upside: 173.79%
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