Allegheny Technologies (ATI) 11/19/09 PriceWatch Alert Technicals Showing Bullish

Posted: Thursday, November 19, 2009 8:25 AM EDT

Allegheny Technologies (NYSE: ATI) closed yesterday at $34.64. So far the stock has hit a 52-week low of $15.00 and 52-week high of $44.09. Allegheny Technologies stock has been showing support around 33.83 and resistance in the 35.71 range. Technical indicators for the stock are Bullish and S&P gives ATI a neutral 3 STAR (out of 5) hold rating. ATI appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at an Apr '10 34 covered call (AAS DQ) for a net debit in the $29.84 area. That is also the break even stock price for this trade. This covered call has a 149 day duration, provides 13.86% downside protection and a 13.94% assigned return rate for a 34.15% 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 ATI Jan '11 17.50 Call (OYG AW) and selling the Apr '10 34 call (AAS DQ) for a $13.25 debit. The trade has a 149 day life and would provide 11.23% downside protection and a 24.53% assigned return rate for a 60.00% annualized return rate (for comparison purposes only). Allegheny Technologies has a current annual dividend yield of 2.10%. [THA-Seven Summits Research]

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