Bull & Bear: Peabody Energy Corporation

Shares of Peabody Energy Corporation BTU have been on the defensive for the past two weeks, losing over 8% during that time period. This begs the question of where shares are headed next… Bulls: The Bulls will note that shares are currently trading on top of the 50-day moving average, which has been a major support level for the past year. The stock is also nearing the $65.00 support/resistance level, where shares could find significant support. Bulls will also note that Peabody Energy Corporation still has an upward-trending 200-day moving average and is trading in significantly oversold territory. A bullish trader could buy the May $67.50 call for $3.25 and sell the May $72.50/60.00 strangle for a net credit of $2.28. Total debit on the trade is $0.97, which would yield a +415% return if shares rallied only 7.4%. Bears: Bears will note that Peabody Energy Corporation has formed a potential island reversal, where shares jumped higher on very high volume only to be sold of on higher than normal volume. If shares where to break the $65.00 level (where the recent rally originated from), it would certainly mean the beginning of a fresh bear trend. A bearish trader could buy the $65/60/55 put tree for a net debit of $0.86. This would give the trader cheap exposure to a -18.44% downside move in the name. Peabody Energy Corporation is a coal company. The company owns majority interests in 28 coal mining operations located in the United States and Australia. In addition to mining operations, it markets, brokers and trades coal. It operates in four segments: its three mining segments and Trading and Brokerage segment. The three mining segments are Western U.S. Mining, Midwestern U.S. Mining and Australian Mining. Its fifth segment, Corporate and Other, includes mining and export/transportation joint ventures, energy-related commercial activities, as well as the management of its coal reserve and real estate holdings. The principal business of its U.S. Mining segments is the mining, preparation and sale of thermal (steam) coal, sold primarily to electric utilities. Through the Trading and Brokerage segment, the Company brokers coal sales of other coal producers both as principal and agent, and trade coal, freight and freight-related contracts