Commercial Metals (CMC) Has 3% Dividend Rate With Support at 15.04

Posted: Thursday, November 12, 2009 9:08 AM EDT

Commercial Metals (NYSE: CMC) closed yesterday at $15.57. So far the stock has hit a 52-week low of $6.25 and 52-week high of $21.29. Commercial Metals stock has been showing support around 15.04 and resistance in the 16.50 range. Technical indicators for the stock are Bearish and S&P gives CMC a neutral 3 STAR (out of 5) hold rating. CMC appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Jun '10 12.50 covered call (CMC FV) for a net debit in the $11.47 area. That is also the break even stock price for this trade. This covered call has a 219 day duration, provides 26.33% downside protection and an 8.98% assigned return rate for a 14.97% 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 CMC Jan '11 5 Call (ZXN AA) and selling the Jun '10 12.50 call (CMC FV) for a $7.05 debit. The trade has a 219 day life and would provide 22.61% downside protection and a 6.38% assigned return rate for an 11.00% annualized return rate (for comparison purposes only). Commercial Metals has a current annual dividend yield of 3.07%. [THA-Seven Summits Research]

Click Symbol For More News On: (CMC)