Selling BTU puts for income.
Peabody Energy Corp. (BTU) supplies coal for generating electricity.
And while coal will eventually be replaced by cleaner fuels, it is still an important resource to keep our electric grid up and running. Plus, new technologies allow for cleaner burning coal plants, helping to reduce pollution.
Coal prices are rising on the heels of rising oil and natural gas prices. And that’s helping to boost profits for BTU. The stock is trending higher and a short-term pullback gives us a great opportunity to set up a new income play.
By selling the June $18 puts near $1.15, we’re able to collect an annualized yield near 67%, while also giving us roughly $3.50 per share in cushion between the current market price for BTU and our strike price.
- Sell (to open) 3 BTU June 17th $18 puts
- Limit: $1.15 or more
- The new position will represent roughly 6.1% of our model.
- 11:37 Trade Adjustment:
- Changing our limit order to $1.10 to make sure we get filled.
- 11:44 Executed:
- Sold 3 BTU June 17th $18 Puts @ $1.13