BP (BP) 9/3/10 PriceWatch Alert With Support Around $35.82

Posted: Friday, September 03, 2010 8:40 AM EDT
By: Market Intelligence Center Staff

BP (NYSE: BP) closed yesterday at $36.57. So far the stock has hit a 52-week low of $26.75 and 52-week high of $62.38. BP stock has been showing support around 35.82 and resistance in the 36.94 range. Technical indicators for the stock are Bearish and S&P gives BP a neutral 3 STAR (out of 5) hold rating. BP appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Jan '11 37 covered call for a net debit in the $33.12 area. That is also the break even stock price for this trade. This covered call has a 141 day duration, provides 9.43% downside protection and an 11.71% assigned return rate for a 30.33% annualized return rate (comparison purposes only). A lower cost hedged play for this stock would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the BP Jan '12 22.50 Call and selling the Jan '11 37 call for a $12.00 debit. The trade has a 141 day life and would provide 5.66% downside protection and a 20.83% assigned return rate for a 54.00% annualized return rate (for comparison purposes only). BP does not pay dividends at this time. [FBB-Seven Summits Research]