Bucyrus International (BUCY) 11/25/09 PriceWatch Alert Support At Around $49.29

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

Bucyrus International (NasdaqNM: BUCY) closed yesterday at $51.68. So far the stock has hit a 52-week low of $10.62 and 52-week high of $55.45. Bucyrus International stock has been showing support around 49.29 and resistance in the 53.61 range. Technical indicators for the stock are Bullish and S&P gives BUCY a very positive 5 STAR (out of 5) strong buy rating. BUCY appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Jan '10 50 covered call (HIK AJ) for a net debit in the $46.98 area. That is also the break even stock price for this trade. This covered call has a 52 day duration, provides 9.09% downside protection and a 6.43% assigned return rate for a 45.12% 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 BUCY Jan '11 12.50 Call (XQX AV) and selling the Jan '10 50 call (HIK AJ) for a $34.40 debit. The trade has a 52 day life and would provide 9.25% downside protection and a 9.01% assigned return rate for a 63.00% annualized return rate (for comparison purposes only). Bucyrus International has a current annual dividend yield of 0.19%. [WBA-Seven Summits Research]

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