Newmont Mining (NEM) 2/9/10 PriceWatch Alert Down To $40.06 Break Even

Posted: Tuesday, February 09, 2010 8:23 AM EDT
By: Market Intelligence Center Staff

Newmont Mining (NYSE: NEM) closed yesterday at $44.41. So far the stock has hit a 52-week low of $34.40 and 52-week high of $56.45. Newmont Mining stock has been showing support around 43.33 and resistance in the 46.51 range. Technical indicators for the stock are Bearish and S&P gives NEM a neutral 3 STAR (out of 5) hold rating. NEM appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at a Jun '10 44 covered call for a net debit in the $40.06 area. That is also the break even stock price for this trade. This covered call has a 130 day duration, provides 9.80% downside protection and a 9.84% assigned return rate for a 27.61% 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 NEM Jan '11 30 Call and selling the Jun '10 44 call for an $11.35 debit. The trade has a 130 day life and would provide 6.89% downside protection and a 23.35% assigned return rate for a 66.00% annualized return rate (for comparison purposes only). Newmont Mining has a current annual dividend yield of 0.92%. [ATU-Seven Summits Research]