Well, way to go so far with WLT, but I think you should be careful with a stock like CLF. You mention they have horrible EPS, etc. but that just happened to be the case over the last year. The predictions for the short term future EPSes are positive. Oh, and their last Qtr EPS was plus 66 cents. I am not making any predictions on where CLF stock will go, but to say they are bleeding money, etc. doesn't seem correct at this point. That would have been better starting say 1 year ago when they were about to head into some horrible Qtrs IMO. JJacksET4
I just wanted to add that I actually agree with alot of the strategy and feel the other picks seem to be reasonable as companies that are going through cash quickly - my only disagreement was with CLF. Just to do a quick sanity check, I think it is useful to go to the stocks main Yahoo quote page, and click Analyst Estimates on the left side of the page. There you can see estimates for the current Qtr, next Qtr, current Year and next year. If you do that with those stocks, you will see that CLF appears to be in way better shape then the other stocks listed, many which are highey negative even for next year. Yes, these are just estimates, but you could probably guess there would be a decent chance the actual EPS would have a good chance to come somewhere between the low and hi estimates at least. JJacksET4
If you're betting on bankruptcy in the next year or so, Chesapeake seems an odd candidate, esp. considering your bearishness on some of the coal producers. I haven't dug into the financials; after a year of high-level attention and kicking McClendon and most of the board out, are they still a mess, or maybe even an Enron in the making? If that's the case, SandRidge Energy, still run by McClendon's mini-me, might be an even better candidate.
I think that is the total for the last 4 qtrs - apparently they had a terrible qtr or 2 maybe 6-12 months ago.
bought some JR miner puts today pretty much my portfolio never has a down day even though i have over a dozen put contracts and the market is rallying
This is trickier than it seems - stocks can take much longer to go broke than you expect, and the timing can be difficult. There can also be huge bear market rallies which can test your conviction. For example in early 2007 I was super bearish on housing, so I bought puts on subprime mortgage finance companies, developers in Florida, banks with exposure to the bubble states etc. Out of my 3 main picks, 2 went broke and 1 collapsed 90% before being taken over. However, my original LEAP puts which were 1 year out, expired before the stock went to zero. I actually had to roll the position for 2 1/2 years before finally the stock went to zero in 2010! This is despite it being a bank, and totally bust the whole 2007-2010 period with NO hope of ever making cash or surviving. Those suckers just kept alive somehow and the stock attracted moron buyers for 3 years. I did make about 6 times my money but during the move the stock once doubled overnight (short sale ban in 2008) and it was quite tricky to hold on for the whole move. I had a small position which is why I could stay in - if it was a 5% bet or something, it would have been harder. So, I would definitely recommend ultra-long-term LEAP puts for these plays, rather than front month or even 6 month options. Secondly, I would focus on stocks you expect to go bust in the next year or so. That way if they lurch on 1-2 more years, you can still do well. If you bet on something that just sucks, it could still be around in 5 years and your puts just decay to zero each year. Another approach is to sell bear vertical option spreads, and collect the premium. Just be prepared for some 100% rallies in the mean time - as long as your size is small you should be able to eat the loss and then roll over next month at a superior price. The problem here is that each time it expires you have to re-write at a lower price (if the stock is downtrending). Anyway, good luck - this is definitely a strategy worth exploring.