New Trade : BTU

Stock / Symbol: Peabody Energy Corp / BTU

Price at trade post: $25.10
Option Strategy: [private_monthly]iron condor[/private_monthly]

Reasoning: Following Patriot Coal's announcement of lower sales volume due to a default by a key customer, pretty much every coal stock was crushed this week, including best of breed Peabody Energy. With BTU trading at a multiyear low, it's unlikely that it'll [private_monthly]drop another 17% and, considering the pressure on the coal industry, it's equally unlikely it'll rise by 22% by June expiration. So, we're trading BTU using an iron condor with a profit range between $21 and $31 by Jun 15 that yields 25%. [/private_monthly]

Trade Details:

BTO 7 BTU Jun12 20 puts
STO -7 BTU Jun12 21 puts
STO -7 BTU Jun12 31 calls
BTO 7 BTU Jun12 32 calls

for a min net credit of $0.20 per contract (current bid $0.15 / ask $0.24) (day order, limit order). If you're not filled today, try to get filled tomorrow but not after that.


Cost/Proceeds ($140)
Option Requirement $700
Total Requirements $560
Estimated Commission $35

Max Risk: $560
Max Reward: $140 or 25% by Jun 15
Profit Range: between $21 and $31 by Jun 15
Suggested Downside Stop @ $21
Suggested Upside Stop @ $31

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