China LIfe Insurance (LFC) 2/9/10 PriceWatch Alert Up To 23.69% Return

Posted: Tuesday, February 09, 2010 8:44 AM EDT
By: Market Intelligence Center Staff

China LIfe Insurance (NYSE: LFC) closed yesterday at $62.50. So far the stock has hit a 52-week low of $38.70 and 52-week high of $81.00. China LIfe Insurance stock has been showing support around 61.71 and resistance in the 63.85 range. Technical indicators for the stock are Bearish and S&P gives LFC a positive 4 STAR (out of 5) buy rating. LFC appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at an Apr '10 60 covered call for a net debit in the $57.50 area. That is also the break even stock price for this trade. This covered call has a 67 day duration, provides 8.00% downside protection and a 4.35% assigned return rate for a 23.69% 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 LFC Jan '11 40 Call and selling the Apr '10 60 call for an $18.55 debit. The trade has a 67 day life and would provide 6.32% downside protection and a 7.82% assigned return rate for a 43.00% annualized return rate (for comparison purposes only). China LIfe Insurance has a current annual dividend yield of 0.68%. [ATU-Seven Summits Research]