Yesterday I published Phil Calderone’s still-bullish take on Hecla.  Below is an interesting way to play the stock from my friend Zane Binder.  This is presented caveat emptor, without endorsement or further comment.

“Have been researching Hecla and there are many ways to play it. The main question is will they be profitable when their silver production falls from nine to seven million ounces. On top of this one must consider what it will cost to clean up the mess at the closed mine. It’ll be closed for the rest of the year, allegedly, but why is only a guesstimate. Worse, things like this often take more than the originally foreseen time. Keep this in mind as you read this (and I’d guess that Hecla will sue the Feds to reopen that worthless pit if the mine can be cleaned up sooner. And will Hecla be fined? Unknown …)

“Anyway, there are many ways to play. First, Hecla has a Series B cumulative convertible preferred (the key word is cumulative) selling for (and redeemable at) $50, it’s selling for $53). It can also be converted any time for $15.55 a share. It pays $3.50. If Hecla has to chop off its common and preferred dividends it’s a good bet the preferred owners (it’s cumulative) will get paid sometime down the road. So far the preferred isn’t suffering like the common. If it does tank this will be a decent play (and if it doesn’t it’s still a halfway decent speculation).

“Secondly, the common is amenable to various bear spreads BUT that big gap down is dangerous. The market hates a vacuum and I expect at some point that gap down will be “filled.” Beware … but a short term spread, I believe, may be another, but risky, way to go.

“Third, just buying a few calls or puts is OK for the adventurous.

“Fourth, I believe buying the stock in a few days when it finally stabilizes (halfway, anyway) with a MARRIED PUT is the way to go. BUT … the married put should be the ’14. Reason: if the mine takes longer to fix than expected (or some huge fine is levied, etc.) the ’14 put (pick the $4, $5, $7 or $10 as you wish) will “insure” your purchase, not to mention not reacting as wildly as the closer in options. Moreover, one’s losses (if any) will be extremely limited. To top it off, should you decide to keep holding Hecla (however long) you can sell calls against your stock every month or two. No matter what happens to Hecla this play will probably result in a nice income stream. With the married put – even if they declare bankruptcy – you’ll almost certainly come out ahead. And as we all know getting a little head brightens one’s day.”