Boeing (BA) 12/22/09 PriceWatch Alert With 6.63% Downside Protection

Posted: Tuesday, December 22, 2009 8:30 AM EDT
By: Market Intelligence Center Staff

Boeing (NYSE: BA) closed yesterday at $54.30. So far the stock has hit a 52-week low of $29.05 and 52-week high of $56.56. Boeing stock has been showing support around 52.91 and resistance in the 55.19 range. Technical indicators for the stock are Bullish and S&P gives BA a positive 4 STAR (out of 5) buy rating. BA appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Feb '10 52.50 covered call for a net debit in the $50.70 area. That is also the break even stock price for this trade. This covered call has a 60 day duration, provides 6.63% downside protection and a 3.55% assigned return rate for a 21.60% 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 BA Jan '11 30 Call and selling the Feb '10 52.50 call for a $20.95 debit. The trade has a 60 day life and would provide 6.17% downside protection and a 7.40% assigned return rate for a 45.00% annualized return rate (for comparison purposes only). Boeing has a current annual dividend yield of 3.08%. [ATU-Seven Summits Research]