Weatherford International (WFT) Is Trading In Tight Support/Resistance Range On Heavy Volume

Posted: Monday, November 16, 2009 8:47 AM EDT

Weatherford International (NYSE: WFT) ended the last trading session at $17.78. So far the stock has hit a 52-week low of $7.75 and 52-week high of $23.74. Weatherford International stock has been showing support around 17.33 and resistance in the 18.41 range. Technical indicators for the stock are Bearish and S&P gives WFT a positive 4 STAR (out of 5) buy rating. WFT appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a May '10 16 covered call (WFT EA) for a net debit in the $14.38 area. That is also the break even stock price for this trade. This covered call has an 187 day duration, provides 19.12% downside protection and an 11.27% assigned return rate for a 21.99% 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 WFT Jan '11 7.50 Call (ODS AU) and selling the May '10 16 call (WFT EA) for a $7.95 debit. The trade has an 187 day life and would provide 13.10% downside protection and a 6.92% assigned return rate for a 14.00% annualized return rate (for comparison purposes only). Weatherford International does not pay dividends at this time. [ABR-Seven Summits Research]

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