CF Industries (CF) 2/9/10 PriceWatch Alert Neutral Price Movement

Posted: Tuesday, February 09, 2010 8:47 AM EDT
By: Market Intelligence Center Staff

CF Industries (NYSE: CF) closed yesterday at $92.32. So far the stock has hit a 52-week low of $49.70 and 52-week high of $102.89. CF Industries stock has been showing support around 90.03 and resistance in the 96.85 range. Technical indicators for the stock are Neutral and S&P gives CF a neutral 3 STAR (out of 5) hold rating. CF appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a May '10 90 covered call for a net debit in the $83.02 area. That is also the break even stock price for this trade. This covered call has a 102 day duration, provides 10.07% downside protection and an 8.41% assigned return rate for a 30.09% 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 CF Jan '11 55 Call and selling the May '10 90 call for a $30.90 debit. The trade has a 102 day life and would provide 6.95% downside protection and a 13.27% assigned return rate for a 47.00% annualized return rate (for comparison purposes only). CF Industries has a current annual dividend yield of 0.43%. [ATU-Seven Summits Research]