Olin (OLN) Down Sharply On Heavy Volume

Posted: Tuesday, February 09, 2010 8:18 AM EDT
By: Market Intelligence Center Staff

Olin (NYSE: OLN) closed yesterday at $15.40. So far the stock has hit a 52-week low of $8.97 and 52-week high of $18.40. Olin stock has been showing support around 15.01 and resistance in the 16.17 range. Technical indicators for the stock are Bearish and S&P gives OLN a neutral 3 STAR (out of 5) hold rating. OLN appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at an Aug '10 15 covered call for a net debit in the $13.70 area. That is also the break even stock price for this trade. This covered call has a 193 day duration, provides 11.04% downside protection and a 9.49% assigned return rate for a 17.95% 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 OLN Jan '11 10 Call and selling the Aug '10 15 call for a $4.40 debit. The trade has a 193 day life and would provide 6.49% downside protection and a 13.64% assigned return rate for a 26.00% annualized return rate (for comparison purposes only). Olin has a current annual dividend yield of 5.02%. [ATU-Seven Summits Research]