Mitt Romney is scaring coal shorts including Arch Coal (ACI), Peabody Energy (BTU), Alpha Natural Resources (ANR), Cloud Peak Energy (CLD), and James River (JRCC).
Romney says "I like coal" and has indicated he would scale back some of the EPA regulations of the Obama administration. A win for him would surely see coal stocks surge and shorts would be scrambling to cover their positions. As such, as long as Mitt has a chance to win, the coal stocks downside should be limited as they were already priced for an Obama re-election.
This presents an opportunity to game not a Romney victory, although that has some delicious possibilities, but to game Romney keeping the coal shorts at bay until the election is over. Our suggestion to game this Romney-floor is to sell cash-secured puts on coal names like Arch.
Dive in and sell puts to take advantage. Check out our articles on selling puts to get some background:
Disclosure: I am long ACI.
