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Investing/Strategies / Options - You Make the Call
|Subject: Possible call option MCP||Date: 8/5/2012 11:50 AM|
|Author: PaulEngr||Number: 10915 of 11137|
First off, let me just say that MCP (MolyCorp) is definitely NOT a stock to be in for the faint hearted. In 2 months time I watched my holdings go from $33 to $40. Then in a matter of days it went from that to $65 at which point I bought a protective put. Then it went to over %70, then plunged all the way back to $48. Needless to say I breathed a sigh of relief for having bought an insurance policy. This kind of price move is not unusual for MCP. So in some ways it's almost to the level of playing around with highly leveraged (ATM) puts and calls.
Just recently it plunged from around $17 to $11.50 much to my dismay. It's not that I won't hold onto what I have. It's just that these kinds of things are somewhat aggravating on the stomach if you know what I mean. Now how I'm thinking of responding to this...more back story.
The back story is this. MCP is a mining company that started out by going back and redeveloping/restarting/rebuilding a site in California to produce rare earth metals. For those not in the know, rare earths are a group of metals that are the last two rows on the periodic table. Chemically they are all ALMOST identical...almost, but not quite. Most are radioactive to one degree or another because on an atomic level, their nucleus's are so large and unstable that it is fairly easy for them to fly apart given a little push from a stray neutron or two...so plutonium, uranium, cesium, thorium, and americium (the most popular radioactive metals) are all rare earths. At the same time they go into the most mundane applications. The "flint" on a typical disposable lighter is actually coated with a material called "mischmetal" which is a polite way of saying that it's a conglomerate of whatever rare earths are available cheaply at the time since rare earths are again, almost chemically identical.
Certain ones however have absolutely amazing properties outside of this. For instance, cerium causes major radical changes in metal chemistries. Ductile cast iron is a revolutionary "new" (circa 1960's) form of cast iron that has the toughness of steel strength of cast iron. Most of it is made of about 95% scrap metal. Adding 0.005% to it controls detrimental effects of certain contaminant elements such as lead and reduces the need for much larger amounts of magnesium. Effectively it is difficult to produce good quality ductile iron without it.
It is also the catalyst used to convert CO into CO2 in automobile catalytic converters, it makes self-cleaning ovens do their thing, helps prevent fading in pigments, helps prevent clear polymers from turning dark, and is often used as the basis for rare earth (super strong) magnets.
OK, and Cerium is one of the more common of the "rare earth" metals, and one of the more popular ones for the reasons stated above, but there are many more of these rare metals that have various fascinating uses.
Starting about 3