Rockwell Automation (ROK) Trade Potential On Investors Observer Hedged Dividend Income List

Posted: Friday, November 13, 2009 8:31 AM EDT

Rockwell Automation (NYSE: ROK) closed yesterday at $43.04. So far the stock has hit a 52-week low of $17.50 and 52-week high of $45.12. Rockwell Automation stock has been showing support around 42.21 and resistance in the 44.23 range. Technical indicators for the stock are Bullish and S&P gives ROK a neutral 3 STAR (out of 5) hold rating. ROK appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Jan '10 40 covered call (ROK AH) for a net debit in the $38.54 area. That is also the break even stock price for this trade. This covered call has a 64 day duration, provides 10.46% downside protection and a 3.79% assigned return rate for a 21.60% annualized return rate (comparison purposes only). Rockwell Automation has a current annual dividend yield of 2.67%. [FBB-Seven Summits Research]

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