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Archive for the ‘Basic Materials’ Category

Coal Stocks Continue Free Fall!! Alpha Natural Resources(ANR) Options Honey?!! By: Tim Bolger

Alpha Natural Resources (ANR) acquired Massey Energy a few years back and has continued to slide alongside the entire Coal sector over the past 12 months. The stock is down over 70% in the past 12 months and is lighting up on my radar as a potential big long term investment opportunity. It has been a very warm winter in the NorthEast and that is not a good environment for Coal stocks…But, are coal stocks hitting a near term bottom?! Legendary Omaha, Nebraska Investor Warren Buffett has made many of his best investments when a sector is out of favor and trading at cheap valuations, but have great long term fundamentals.  Presently, I am seeing lots of value in Coal stocks and think the big slide over the past 12 months may be nearing an end.

Attached is a profile on Alpha Natural Resources(ANR) courtesy of Yahoo Finance: Alpha Natural Resources, Inc., together with its subsidiaries, engages in producing, processing, and selling steam and metallurgical coal in the United States. The company has mining operations in Virginia, West Virginia, Pennsylvania, Kentucky, and Wyoming. As of December 31, 2011, it owned or leased approximately 4.7 billion tons of proven and probable coal reserves; and operated 145 mines in northern and central Appalachia and the Powder River basin. The company is also involved in repairing and reselling equipment and parts used in surface mining; manufacturing particulate scrubbers and filters for underground diesel engine applications; rebuilding underground mining equipment; and providing coal and environmental analysis, and degassing services. In addition, it engages in the sale of non-strategic assets, such as timber, gas, and oil rights, as well as the lease and sale of non-strategic surface properties and reserves; coal brokerage; and road construction business. The company serves electric utilities, steel and coke producers, industrial customers, and energy traders and brokers. Alpha Natural Resources, Inc. was founded in 2002 and is based in Abingdon, Virginia.

What is the Options play on Alpha Natural Resources(ANR)?! ANR stock is trading at $16.64(10:29 Est Standard Time) and is down close to 70% in the last 12 months. Is now the perfect time to load up on the stock and options??

Trade#1: I would consider buying the ANR September 21, 2012 $19 strike Call Options for $1.60 a contract. Attached are the Sept. 21, 2012 Options Chains courtesy of Yahoo Finance:http://finance.yahoo.com/q/op?s=ANR&m=2012-09.  I can buy 10 contracts for $1,600 plus trading fees. That will get me long exposure to 1,000 shares of ANR at a strike price of $19. If Coal stocks recover over the next 6 1/2 months, ANR may be poised to lead this sector higher and outperform a majority of coal stocks. I am looking for ANR to trade $28 or higher by the September 21, 2012 Options expiration date. Hopefully, it will be a hot summer and that will be good for coal stocks, if Air conditioning use sky rockets. At $28 a share, my contracts will be worth $9.00($9.00x 100 shares per contract=$900 each) or greater. $900 x10 contacts=$9,000. Let’s hope this Coal slide comes to an end shortly and reverses course. Good luck to all the Coal and ANR Bulls!!! For more conservative longer term investors, I like buying shares of ANR stock at $15.00 or less.

Trade#2: I am an ANR Bull and would consider selling the ANR April 20, 2012 $15 strike Put Options for .90 cents a contract. Attached is the April 20, 2012 Options Chains on ANR courtesy of Yahoo Finance:http://finance.yahoo.com/q/op?s=ANR&m=2012-04. If I Sell 10 Put Option contracts, I will credit $900 to my brokerage account. 10 contracts x $90 per contract=$900. Remember, that we need $15,000 in cash reserves in our brokerage account in order to place this trade. The $15,000 is for the worst case scenario in which we get exercised on the 10 Put Option Contracts we sold (10 contracts x 100 shares=1,000 shares) of ANR at the $15 strike price at expiration. We will only get exercised on the shares of ANR if the stock trades below $15 on the expiration date. Either way, I am comfortable getting long shares of ANR stock at $15 and selling the Put Option contracts will help finance $900 towards my potential purchase of the $15,000 in stock. Go ANR Bulls and remember that Options are risky financial instruments. Please consult your investment advisor before buying or selling any Options/Equity Securities.

English: Logo for Alpha Natural Resources

Image via Wikipedia

See Below a 1 year chart on Alpha Natural Resources(ANR) courtesy of BigCharts.com:

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Bernanke Speaks on Capitol Hill and Precious Metals Plummet!! Gold Tanking…Options?! By: Tim Bolger

English: A frame from a screencast from the US...

Image via Wikipedia

Federal Reserve Chairman Ben Bernanke is speaking on Capitol Hill at the moment…During his speech the markets have all turned into the red and Gold is plummeting over $65 an ounce(11:50 am Eastern standard time)…Wow!! It is amazing how the Fed chief can move markets and metals prices in just a few seconds while addressing Congressional leaders and the American people.  I’m a long term bull on Silver and very bullish on Goldilox…Gold was trading down as much as $80 an ounce intraday.

So what is the options play on Gold tanking today?!

Trade#1: I would consider selling the $165 April 20, 2012 Put Options on the GLD for $4.25 a contract. Remember that in order to sell these 3 contracts, we need to have $49,500 in cash reserves in our brokerage account in case we get exercised on the GLD shares at $165 a share.  I am comfortable going long the GLD at $165 and therefore I like this trade alot…By selling 3 Put Option contracts, I will collect a premium of $1,275 minus trading fees. If the GLD bounces after this major sell off today and moves higher I will not get exercised on these shares at expiration. Either way, I like this trade and selling the Put Options will help finance the worst case scenario, in which I get exercised on 3 Put Option contracts (3 x 100= 300 Gld shares at $165 a share). Attached is the April 20, 2012 Options Chains on GLD courtesy of Yahoo Financehttp://finance.yahoo.com/q/op?s=GLD&m=2012-04.

Trade#2: I would consider taking advantage of this huge sell off in Gold today and think about buying the $165 June 15, 2012 expiration GLD Call Options for $4.80 a contract. I can buy 10 Call Option contracts for $4,800 plus trading fees and that will give me long exposure to 1,000 shares of GLD at $165 a share. My $4,800 investment will be worth over $10,000 if GLD trades to $175 by the June 15, 2012 expiration.  Attached is the June 15, 2012 Options Chains on GLD courtesy of Yahoo Finance:  http://finance.yahoo.com/q/op?s=GLD&m=2012-06. Good luck to all of the Goldilox bulls and stay tuned to Optionshoney.com for more Options action!! Show me the honey!!

For more conservative investors, I would stay away from the Options on GLD and just buy the GLD at $165 or less. The GLD is a great hedge on higher inflation and a weak U.S. Dollar…The other way to get Gold exposure is by purchasing 10 ounce gold bars or the beautiful 1 ounce Gold American Eagle coins. It is really nice to own the physical and fun to hold these shiny yellow bars/coins…and yes they are worth alot of money too!! I am also a big fan of owning shares of Canadian gold miner: Barrick Gold Corporation (ABX) at $45 or less a share.

Greece Inks a Huge 2nd Bailout!! Metals Jumping! Options honey?! By: Tim Bolger

Photo courtesy of: http://www.iho-ohi.org/index.php/category/greece/

Athens Greece

Riots continue to escalate all over Athens throughout the long weekend and Greece inks a 2nd bailout deal with European finance officials to save the country from bankruptcy in the short term…such a beautiful country that has been crushed by sovereign debt issues and a very weak economy. The Dow Jones is flirting with 13000 and metals are jumping today on this breaking news on Greece…Gold is up over $26 an ounce today and I posted an article on Jan 17, 2012 about my long term bull case for Goldilox moving higher…here is my previous post on Gold: http://optionshoney.com/2012/01/17/can-you-say-goldilox-is-soaring-this-shiny-metal-is-hott-in-january-gold-options-honey/.  I suggested traders/investors think about buying the June 15, 2012 $165 strike Call Options on the GLD for $6.00 a contract. Those GLD Options contracts are spiking higher today and may still move much higher in the near term. The ishares Silver Trust(SLV) is trading 2% higher as well today.   I would recommend more conservative investors to buy shares of stock on the GLD and SLV for the long term…I like the GLD at $165 and the SLV at $29.

I am very positive on the miners going forward and I think there is still huge upside in that space…Many of the miners have underperformed the big rise in metals prices over the past few years and that is where I am seeing the most opportunity for investors seeking value plays.  I am increasing my position today on Hecla Mining (HL) by buying the Call Options and I would be a buyer of the Call options on General Molycorp(GMO) as well. Hecla Mining reported earnings today and the stock is soaring over 7 %…Business wire reports: Hecla Reports Record 2011 Revenue & Gross ProfitsBusiness Wire(Tue 8:00AM EST). Hecla Declares Silver-Linked Dividend and Adds New Minimum DividendBusiness Wire(Tue 8:15AM EST)

A quick profile bio on Hecla Mining courtesy of Yahoo Finance: Hecla Mining Company, together with its subsidiaries, engages in the discovery, acquisition, development, production, and marketing of silver, gold, lead, and zinc. The company produces lead, zinc, and bulk concentrates and sells them to custom smelters; and unrefined gold and silver bullion bars, which it sells to precious metals traders. It holds 100% interest in the Greens Creek operating unit located near Admiralty Island in Alaska; and 100% interest in the Lucky Friday operating unit located in Idaho. Hecla Mining Company founded in 1891 and is based in Coeur d’Alene, Idaho.

http://www.hecla-mining.com/exploration/ Chart below is on Hecla Mining Silver Growth:

Silver Growth

What is the Options Play on Hecla Mining?!  

Hecla Mining(HL)  is jumping over 6.5% today and I would think about buying the March 16, 2012 $5 strike Call Options on HL for .45 cents a contract.  Attached is the March 16, 2012 Options Chains for HL courtesy of Yahoo Finance:  http://finance.yahoo.com/q/op?s=HL&m=2012-03.

I would also consider buying longer term options contracts on HL further out to give us a little more time for a continued rise in the shares of HL.  I like the HL June 15, 2012 $6 strike Call Options for .25-.30 cents a contract. Attached is the Options Chains on HL for June 15, 2012 expiration courtesy of Yahoo Finance: http://finance.yahoo.com/q/op?s=HL&m=2012-06. Stay tuned for more big trades at http://www.Optionshoney.com!!

See below the 5 day technical chart on Hecla Mining (HL) courtesy of Fidelity Investments:

Chart

Rare Earth Miners Continue Rally!! Lynas Corp and General Molycorp Soaring!! Options?? By: Tim Bolger

A little over a week ago, I posted on Optionshoney https://optionshoney.wordpress.com/2012/01/25/rare-earth-miners-up-big-in-late-trade-options-active-on-molycorp-and-avalon-rare-metals-by-tim-bolger/my bullish view on a number of Rare Earth Miners that were my top picks for 2012 and I argued that they could trend much higher following the blow-out quarter of Apple earnings.  To reiterate, my favorite investment picks in the rare earth space are Avalon Rare Metals (AVL), General Molycorp (GMO), Molycorp (MCP), and Lynas Corp. (LYSDY.Pk).  Take a look at the ten day technical chart below courtesy of Fidelity Investments.  This move to the upside has meant big money for call options on GMO and AVL.  The $3 and $4 strike Call Options on AVL and GMO are rallying again today…The biggest move to the upside in the past days has been led by Australina Rare Earth Miner: Lynas Corp, which has soared over 25% in past ten days.

Ten day chart is courtesy of Fidelity Investments:

Chart

Hecla Mining Rallying on Big Volume!! March $5 Call Options!? By: Tim Bolger

I previously posted an article/options play on Optionshoney.com regarding the huge sell off in Hecla Mining (HL) shares and argued that the sell off was overdone. Read more at http://optionshoney.com/2012/01/11/hecla-mining-pounded-on-huge-volume-lets-mine-the-honey-with-options/.  I was looking for a bounce in the shares in the short term and that has come to fruition in the past week.  HL is rallying over 4% this afternoon and is moving much higher alongside several other metals stocks and rare earth mining stocks.

What are my Options Honey??

I still like the HL Mar 17, 2012 $5 strike Call Options for around .30 cents a contract. Stay tuned for more and go bulls on HL!! Check out the 10 day chart below on Hecla Mining (HL) and you can see the big bounce in the shares after a huge sell off.  Also in the chart, is Silver Wheaton (SLW), which is another top metals pick for me. I will discuss SLW in greater detail in posts to come shortly on Optionshoney.com.

Chart Courtesy of Fidelity Investments:

Chart

Rare Earth Miners Up Big in Late Trade!! Options Active on Molycorp and Avalon Rare Metals!! By: Tim Bolger

After a pullback the last few days, Rare earth miners are staging a late day rally.  Why is this happening? Several possibilities, including big Tech earnings by Apple. These rare earth minerals are vital for building technology products like the ipod, disk drives, Mp3 players etc.  Another very likely reason for the spike in shares is the Fed pledging this afternoon to keep interest rates at historic lows through late 2014…that is a formula that spells a weak U.S. dollar and rising metals prices to me…that all equals rapid inflation to me…Keep an eye on a few of my favorite stocks in the rare earth space, which include: Molycorp, Avalon Rare Metals, and Lynas Corp. Tickers MCP, AVL, and LYSDY.pk.  All of these stocks are up over 5.5% on big volume today. MCP is up over 7% and Lysdy.pk is spiking 10%…Show me the money honey!!!

 

Remember my previous post on buying the Call Options on AVL…that trade is still in full effect and I like the Call Options on Molycorp(MCP) as well. I would think about buying the MCP Mar 17, 2012 30 strike Call Options for 2.35 a contract, with a slight pullback in the shares of Molycorp.  I am also still a big fan of the AVL Mar 17, 2012 3 strike Call Options for .25 cents.  Rare Earth Miners have room to run much higher in my opinion. So, Stay tuned to Optionshoney.com for more news on the Rare earth miners and options plays!!

 

Chart Courtesy of Fidelity Investments:

Chart

Can You Say Goldilox is Soaring?? Flight to Safety? This Shiny Metal is Hott in January!! Gold Options Honey? By: Tim Bolger

Who does not love Gold?? Well, maybe not everyone because it does not pay a dividend to investors.  But, I love this shiny metal!! Like Gold or not, it has been a big winner for many investors over the past few years and has provided alot of alpha to investment portfolios that would have otherwise suffered severely from high exposure to financial stocks, the sovereign debt crisis, volatile global stock markets and high unemployment around the globe.

We all know that thus far, the Federal Reserve’s monetary policy has involved printing way too many U.S. dollars to fight this recession, has kept the Federal Funds Rate at historic lows, and the result has been a very weak U.S. dollar… I translate the current economic scenario as one that makes me want to buy lots of Goldlilox!! I love gold coins and love owning the Gld.  Getting long exposure to Gold is easiest to get with the Gld (SPDR Gold Trust).  Gold hit a high of over $1,900 per ounce in 2011 and then got hammered along with several other precious metals in the month of Dec 2011. Gold fell close to $1,500 an ounce…that was painful for many Gold bulls in the money of Dec and led them to flee to the sidelines, many of which were forced to sell because of big margin calls on this commodity. Margin gives you great leverage at times, but it is very risky for volatile commodities in the short and long run…Margin calls can wipe you out of cash and trading on Margin is not recommended for many retail or institutional investors.

The sharp sell off in Gold in the month of Dec 2011 spooked alot of Gold bugs out of this shiny precious metal. Was the massive gold sell off just a huge head fake or is the bull run in Gold over?!…I think it was more of a short term correction in the shiny yellow metal…the sell off I believe was further exacerbated by lots of profit taking, margin calls and a short term phenomena. I am a firm believer in owing Gold for the long term and as a means to protect wealth…I believe Gold is a great safe haven from all of the macro-economic uncertainty prevailing around the globe!! Gold protects us against a weak global equity market and a weak U.S. dollar(which means high inflation).  Gold is a great hedge against major global economic issues(eg sovereign debt crisis in Europe), but I also believe that Gold can still run to $2,100 an ounce even if the global equity markets continue to move higher…Over the past 3 weeks we have seen Gold spike higher and I think the Gold train continues to run higher baby!!

Options trade#1: Yahoofinance Gld Jun 15, 2012 Options chain: http://finance.yahoo.com/q/op?s=GLD&m=2012-06.  I would consider buying the Gld 165 Jun 15, 2012 Call Options for $6.00 a contract. 5 contracts will cost me $3,000 plus trading fees and get me long exposure to Gold(500 shares of the Gld SPDR Gold Trust at $165 a share). If Gld trades to 175 before this options’ expiration date, this trade will be worth $5,000+. Take a look at the yahoofinance chart below on the Gld. Gld has moved significantly higher after being crushed in the month of December and I believe the longer term trend is to the upside. Good luck longs and remember that this is just a hypothetical scenario for everyone. Consult your financial advisor before making any trades…see the Optionshoney disclaimer. Options trading is not for all investors and is very risky!! Do not play if you cannot afford to lose all of your money invested in the contracts you may decide to purchase. Optionshoney  disclaimer.

The more conservative play is just buying these lovely American Eagle Gold Coins exhibited below and hold them forever!! Several other Gold Coins and Gold Bars are available for purchase from vendors such as Monex.com. Photo is courtesy of http://www.monex.com:

American Gold Eagle Coins - Buy Gold American Eagles

Chart forSPDR Gold Shares (GLD)

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