BTU covered calls action update

With the sad flailing of Bernanke & co. this week we enjoyed a rally.

Our BTU holding rose as much as 42% from its lows on March 9 to its highs yesterday, however it seems extremely unlikely it'll make it past the $30 mark.

We currently are obligated by our outstanding March $30 covered calls sold against this long position. These were last offered at $0.15 and we shall buy them back thus making nearly the full 100% possible on this hedge.

We prefer not to let these calls simply expire this weekend primarily because we expect the markets to drop Friday as sobriety and profit-taking factor in the general markets, and if so this could be the start of a material correction of the recent rally, thus we hope it'll prove advantageous to open a fresh covered call position at the current high prices as well as ensuring we go into the weekend with an effective hedge.

We'll sell the April $30 calls last bid at $1.65

Of course actual prices may vary somewhat once markets open, but as the March strike goes up or down of course the April strike will move almost equally so the net effect will be the same - we'll effectively reduce our cost for these shares to $20.46 and if they're called away we'll profit 47% on the position.

If the shares are not called away, we'll gladly continue to sell covered calls against the holding to reduce the cost further.

Additional details of this position will be found in these postings :

selling BTU and VZ covered calls, shorting GCI

selling BUD +11% in 6 weeks / +100% on puts, buying BTU.



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