Search

 

Cabot Oil and Gas (COG) 12/2/09 PriceWatch Alert With 16.06% Downside Protection

Posted: Wednesday, December 02, 2009 8:25 AM EDT

Cabot Oil and Gas (NYSE: COG) closed yesterday at $39.24. So far the stock has hit a 52-week low of $17.84 and 52-week high of $42.80. Cabot Oil and Gas stock has been showing support around 38.33 and resistance in the 39.85 range. Technical indicators for the stock are Bullish and S&P gives COG a positive 4 STAR (out of 5) buy rating. COG appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at an Apr '10 35 covered call (COG DG) for a net debit in the $32.94 area. That is also the break even stock price for this trade. This covered call has a 136 day duration, provides 16.06% downside protection and a 6.25% assigned return rate for a 16.78% 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 COG Jan '11 17.50 Call (ZIL AW) and selling the Apr '10 35 call (COG DG) for a $16.15 debit. The trade has a 136 day life and would provide 14.25% downside protection and an 8.36% assigned return rate for a 22.00% annualized return rate (for comparison purposes only). Cabot Oil and Gas has a current annual dividend yield of 0.31%. [WBA-Seven Summits Research]

Click Symbol For More News On: (COG)