Selling BTU puts for income.
Peabody Energy (BTU) operates 17 coal mines in the U.S. and Australia.
The world is in an energy crisis with strong demand for electricity and limited capacity from from natural gas and renewable energy power plants.
This means demand for BTU’s coal will remain high this year. And the company is now less of an environmental concern because of technology that helps to reduce emissions from coal-fired electricity generation.
I expect shares to holdup well this summer. And the stock gives us an excellent reward-to-risk play given the high price for put contracts.
By selling the August $19 puts near $1.35, we’re able to collect an annualized yield near 44%, while also giving us roughly $5.00 per share in cushion between the current market price for BTU and our strike price.
- Sell (to open) 3 BTU August 19th $19 put
- Limit: $1.35 or more
- The new position will represent roughly 6.6% of our model.
- 11:48 Executed
- Sold 3 BTU Aug 19th $19 Puts @ $1.45