I am not sure how much more money (if any) they will lose if they shut down.
One of the problems with the French system is that it is impossible to lay anyone off. So we may be operating this plant past what the shutdown point would be in the US or UK simply due to employment obligations.
I wish the refinery workers well, but if we're losing money on refining, and if they're as stuck in this industry as we are, it's hard for us to offer raises.
Perhaps a contract offering them some equity in these god-forsaken European refineries would work.
The ten year yield is down today, at least according to Yahoo. Although the bloodbath in the homebuilders today would bolster your argument.
I think regulation always raises uncertainty and volatility. And when that happens, investors back off, especially from stocks that haven't been doing that well, even if the news is somewhat positive.
I think a lot of investors are in "I'll believe it when I see it mode" when it comes to earnings for next year. And I think this kind of a situation- EXC being stuck in a trading range, historical vol being relatively low, some weird upside potential, plays decently for upside calls.
Here is my thought process on why this could be dropping:
No new coal plants - bearish for coal prices - lower production costs for coal plants - lower electricity prices (at least temporarily). Entergy is also down along with many non-nuclear utilities (IE First Energy). So if it's any consolation, whatever is afflicting Exelon is afflicting everybody.
But long-run, Obama has reduced the threat of new entrants and is setting us up for a 2005-like situation in a few years where the country runs out of spare capacity. And natgas prices have broken $5/mmbtu and EXC is paying down debt.
This will start to get priced in at some point and sentiment will shift, just as it has done for Exelon before.
If we don't declare bankruptcy in the meantime, and we don't need to issue too much equity in the meantime, Exelon will be in much better shape in ten years, thanks to Obama.
1. Exelon is trading with 15% vol a year out. That's pretty cheap right now.
2. There may be more shoes to drop on the CO2 regulations.
3. Natural gas prices have been increasing.
I'm not going to say which strikes I really like (I may be buying more), but I'm willing to say that strikes in the $30s for 2015 and 2016 look pretty cheap right now. And if we wind up getting CO2 regs for natural gas plants, they're going to look like a ridiculous bargain.
Please be patient with your position. And I recommend not playing the options market on the expectation that prices will change instantly- so don't buy anything with less than a Jan 14 expiry. But at 15% vol with a lot of regulations that could present upside for EXC floating through the system, EXC calls look cheap again.