Tesoro (TSO) 2/9/10 PriceWatch Alert Up To 22.94% Return

Posted: Tuesday, February 09, 2010 8:37 AM EDT
By: Market Intelligence Center Staff

Tesoro (NYSE: TSO) closed yesterday at $11.81. So far the stock has hit a 52-week low of $10.62 and 52-week high of $19.16. Tesoro stock has been showing support around 11.54 and resistance in the 12.16 range. Technical indicators for the stock are Bearish and S&P gives TSO a very weak 1 STAR (out of 5) strong sell rating. TSO appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at an Aug '10 11 covered call for a net debit in the $9.81 area. That is also the break even stock price for this trade. This covered call has a 193 day duration, provides 16.93% downside protection and a 12.13% assigned return rate for a 22.94% 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 TSO Jan '11 5 Call and selling the Aug '10 11 call for a $5.20 debit. The trade has a 193 day life and would provide 13.63% downside protection and a 15.38% assigned return rate for a 29.00% annualized return rate (for comparison purposes only). Tesoro does not pay dividends at this time. [ATU-Seven Summits Research]