Clorox (CLX) 11/18/09 PriceWatch Alert Support At Around $59.31

Posted: Wednesday, November 18, 2009 8:43 AM EDT

Clorox (NYSE: CLX) closed yesterday at $60.21. So far the stock has hit a 52-week low of $45.67 and 52-week high of $61.94. Clorox stock has been showing support around 59.31 and resistance in the 60.67 range. Technical indicators for the stock are Bullish and S&P gives CLX a neutral 3 STAR (out of 5) hold rating. CLX appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Jan '10 60 covered call (CLX AL) for a net debit in the $58.41 area. That is also the break even stock price for this trade. This covered call has a 59 day duration, provides 2.99% downside protection and a 2.72% assigned return rate for a 16.84% 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 CLX Jan '11 45 Call (VUT AI) and selling the Jan '10 60 call (CLX AL) for a $13.70 debit. The trade has a 59 day life and would provide 2.51% downside protection and a 9.49% assigned return rate for a 59.00% annualized return rate (for comparison purposes only). Clorox has a current annual dividend yield of 3.35%. [WBA-Seven Summits Research]

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