WEDNESDAY, APRIL 13, 2016
The image to the left has nothing to do with today, but I couldn’t resist. We all need a little humor from time to time and while searching for a good leading image I came across this one and laughed out loud. Call me nerdy!
Global markets rallied overnight with the Shanghai Composite Index closing up 1.4% @ 3,066.64. Germany’s DAX 30 index opens 1.5% higher @ 9,904.62. The OPEC and non-OPEC member meeting scheduled for Sunday in Doha looms providing little solace for investors. Most analysts agree there will be no “bullish surprise” during or after the meeting and the average per barrel price for crude oil remains $35.00.
Peabody Energy Corporation [stock_quote symbol=BTU]
Peabody files Bankruptcy. On Wednesday, Peabody Energy Corporation announced a majority of U.S. entities will be filing voluntary Chapter 11 protection in U.S Bankruptcy Court for the Eastern District of Missouri. Peabody does expect operations to continue in ordinary course of business and the Australian platform is not part of this filing.
Peabody’s recent liquidation attempt of their New Mexico and Colorado assets was terminated after the buyer was unable to complete the transaction. This was, more than likely, a contributing factor in their moving forward with Chapter 11 protection.
Trading of Peabody Energy Corporation shares on the NYSE is expected to be suspended immediately. Peabody Energy Corporation is a small cap coal company that received national attention in August 2015, when Billionaire investor George Soros scooped up 1 million shares. I wonder how he feels about that now or if he even still owns them?
STOCKS TO WATCH TODAY
We’ve had a good rally over the past couple of days. It was my belief that we would or will see a down day today, but from what I can tell the global markets are up and we may see continued upward movement. As of this writing (3:13 AM Wednesday) I have moved the following to the top of my watchlist for today:
Denbury Resources [stock_quote symbol=dnr]
If DNR falls below $2.76 per share (my current cost basis) I plan to purchase 600 more shares of actual stock bringing my total to a nice 1000 shares. I’m doing this before the OPEC and non-OPEC member meeting this weekend just in case oil sees a bounce next week. If it does not (or better yet it crashes) I plan to SELL cash-secured PUT’s for the $2.00 strike. The goal is to own 1000 shares, and continue selling PUT’s for premium income and maybe to acquire shares at a discount if assigned.
Vanguard Natural Resources [stock_quote symbol=vnr]
Same goes for VNR. I’m strategically positioning myself based on the potential outcome this weekend and next week. If VNR falls below $1.95 per share I plan to purchase another 100 shares of stock and 10 contracts of the JULY 1.5 CALL option @ .30 cents per. I currently own 100 shares of stock with a cost basis of $1.53 and 8 contracts of the JULY 1.5 CALL option @ .45 cents per. My goal is to hold 2000 shares of stock for the long-term. I also plan to SELL 50 contracts of the MAY 2 PUT for .30 – .40 cents if the underlying comes down and another 50 contracts for .50 – .60 if the underlying really comes down for a total premium of somewhere in the $4,500.00 to $5,000.00 range. If the MAY 1.5 PUT premium increases to .30 cents per contract or above, I may move to it instead. Why do I plan to purchase if VNR falls below $1.95? Because, I purchased my original JULY 1.5 CALL options for .45 cents making my cost basis (if I choose to exercise which at this rate I will) $1.95 so anything below that I’m doing better than my JULY CALL’s. Make sense?
Pandora [stock_quote symbol=p]
I am made fun of for liking Pandora. I can hear all of you laughing…it’s ok. I laughed once too when it was $9.00 per share and watched it skyrocket to $40.00. Sure, that was a different time and competition is fierce, but you know what? I’m still a believer. I believe Pandora has a great product, I still use it daily and with the founder returning as CEO I believe good things are coming. Call me crazy. I am watching the stock to see if it holds the mid-8’s as I believe $8.00 per share is the support level. I would be willing to sell the MAY 7 PUT if the underlying creeps down. I would be willing to sell the MAY 8 PUT as well because I believe (raising hands in the air).
Starbucks [stock_quote symbol=sbux]
How can you not keep your eye on Starbucks? It’s just something I do daily. I’m very interested in the JUNE 62.5 CALL option and I’ve been watching it for weeks. I’ve been courting it if you will and watched it trade from $1.44 – $1.68 per contract down to .68 Tuesday morning and back up to $1.02 by lunch. It’s been all over the board. If Starbucks sees additional pull back today and this option decreases back to .70 per contract I would be hard pressed not to pounce. They report earnings in two (2) weeks – perfect time to buy call’s and sell the day before or day of earnings. This is an easy 20% gainer.
Avalon Advanced Materials [stock_quote symbol=avlnf]
Avalon is a sore subject for me. They started out as a rare earth metal mining company and rare earth miners were all the rage a few years ago (complete crap). I owned 100,000 shares of stock for a couple of years and recently (back in October) dumped them after giving up. Well, that was a poor decision given the fact the stock has doubled in the last week. It was delisted (voluntarily) at the end of last year and now trades OTC (over the counter) with the penny stocks. I do strongly believe and have always believed that Avalon will make a comeback. I envisioned 2017 being “their year” and look forward to watching it. A recent news article suggested several things that make me believe revenue is coming and could be big. I’m waiting for the dust to settle after said news article and the stock to return to .12 cents or below. I will reacquire at least 10,000 shares at that point (just in case). This time, I won’t sell…