selling BTU and VZ covered calls, shorting GCI

Last update we wrote that we "expect the markets to rise for the rest of the week" however the rest of that week was dire indeed. Since then the markets have generally rallied however, so we weren't off by much.

Unfortunately our BTU position is a bit lower than our purchase and until now we didn't see a good opportunity to follow our stated plan to "lower our cost basis by selling covered calls against the equity position". However now we sell March 2009 $30 calls, last bid at $2.40, against our existing BTU shares.

If our shares are called away, we're assured of profiting over 30%. In the meantime we lower our effective entry price by 10% via the sale of these covered calls.


Verizon, VZ, we purchased in July and unlike the vast majority of stocks in the world these shares are almost back to the pricing the enjoyed this past summer when we bought them, closing today at $34.23 Currently we fear the markets may retrace the recent rally and we perceive resistance above this level for Verizon stock so we sell covered calls against this position too. Specifically we sell the April 2009 $40 calls, last bid at $1.53, against our existing Verizon shares.


Finally we add a new short position. While the markets may have found a bottom print media has not, as per yesterday's news :

"Dealing with $13 billion in debt and declining revenues, media and sports conglomerate Tribune Co. filed for bankruptcy protection yesterday (Monday). The company - which owns the Chicago Cubs and newspapers The Chicago Tribune, Los Angeles Times and Baltimore Sun - was famously taken private last year by real estate mogul Sam Zell, The Associated Press reported."

Thus we short print media company Gannett Co. Inc. , GCI which last traded at $9.16

Jobless losses will rise dramatically in coming months, but people will not be looking to newspapers for more work nor will increased advertising - for jobs or anything else - be found there, thus along with their decreasing revenue streams we expect to see more print media companies fail including, we believe, Gannett.








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