A Too-Obvious Romney Trade

There is nothing forcing you to make a prediction on the presidential election or a trade into the results. Another viable position -- and an acceptable one at that -- is remaining and staying rather well-hedged as you await the outcome.

Still, there appears to be some pre-election long positioning into some energy names, with coal at the forefront. I'm starting to feel as if this is the too-obvious trade into a potential win from Republican nominee Mitt Romney. If coal continues to run higher Monday and Tuesday, then I will actually look at some puts in the high-beta names within the coal sector. If Monday witnesses a 4%-to-5% higher move in some of these names, such as in Arch Coal (ACI) and Alpha Natural Resources (ANR), then show me any green plays tomorrow -- I'll be a put buyer. As fellow Real Money Pro contributor Bob Byrne mentioned to me, I should consider taking a portion of the position later today, and I do think I'll need to give that some thought. I am hedging these today, so I am delta neutral, but I am looking at possibly going delta negative (net short)....309 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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