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Archer Daniels Midland (ADM) Gets Neutral 3 STARs S&P Rating

Posted: Monday, March 01, 2010 9:03 AM EDT

Archer Daniels Midland (NYSE: ADM) closed yesterday at $29.36. So far the stock has hit a 52-week low of $23.13 and 52-week high of $33.00. Archer Daniels Midland stock has been showing support around 28.94 and resistance in the 29.78 range. Technical indicators for the stock are Bearish and S&P gives ADM a neutral 3 STAR (out of 5) hold rating. ADM appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jun '10 29 covered call for a net debit in the $27.66 area. That is also the break even stock price for this trade. This covered call has an 110 day duration, provides 5.79% downside protection and a 4.84% assigned return rate for a 16.08% 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 ADM Jan '11 20 Call and selling the Jun '10 29 call for an $8.10 debit. The trade has an 110 day life and would provide 4.29% downside protection and an 11.11% assigned return rate for a 37.00% annualized return rate (for comparison purposes only). Archer Daniels Midland has a current annual dividend yield of 2.03%. [ABR-Seven Summits Research]

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