Goldcorp (GG) 2/9/10 PriceWatch Alert With $30.66 Break Even

Posted: Tuesday, February 09, 2010 8:34 AM EDT
By: Market Intelligence Center Staff

Goldcorp (NYSE: GG) closed yesterday at $34.41. So far the stock has hit a 52-week low of $26.15 and 52-week high of $46.24. Goldcorp stock has been showing support around 33.28 and resistance in the 36.48 range. Technical indicators for the stock are Bearish. GG appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jul '10 35 covered call for a net debit in the $30.66 area. That is also the break even stock price for this trade. This covered call has a 158 day duration, provides 10.90% downside protection and a 14.16% assigned return rate for a 32.70% 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 GG Jan '11 22.50 Call and selling the Jul '10 35 call for a $9.50 debit. The trade has a 158 day life and would provide 7.00% downside protection and a 31.58% assigned return rate for a 73.00% annualized return rate (for comparison purposes only). Goldcorp has a current annual dividend yield of 0.54%. [ATU-Seven Summits Research]