Short Coal with the KOL ETF

A number of coal stocks have fallen out of favor as the price of coal has dramatically fallen over the past three weeks. There was an initial spike down in coal at the beginning of July with a small rally. Now the chart for coal has broken below resistance and is due for a further decline.

The ETF

            Instead of picking an individual coal stock to short, there’s an ETF that is long the commodity that you can short or buy a Put against. That ETF is the Market Vectors Coal ETF (KOL).

The Trade

            Short the KOL ETF when there’s a lift in the morning or a rally during lighter trading between 12-1pm. You should place a stop on the position 10% above your entry price and adjust the market stop everyday as the ETF moves down. Let the position run or let the market stop get you out.