Plains Exploration and Production (PXP) PriceWatch Alert for February 9, 2010

Posted: Tuesday, February 09, 2010 8:33 AM EDT
By: Market Intelligence Center Staff

Plains Exploration and Production (NYSE: PXP) closed yesterday at $31.24. So far the stock has hit a 52-week low of $15.25 and 52-week high of $36.60. Plains Exploration and Production stock has been showing support around 30.26 and resistance in the 32.36 range. Technical indicators for the stock are Bullish and S&P gives PXP a positive 4 STAR (out of 5) buy rating. PXP appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at an Aug '10 31 covered call for a net debit in the $26.84 area. That is also the break even stock price for this trade. This covered call has a 193 day duration, provides 14.08% downside protection and a 15.50% assigned return rate for a 29.31% 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 PXP Jan '11 22.50 Call and selling the Aug '10 31 call for a $6.35 debit. The trade has a 193 day life and would provide 7.65% downside protection and a 33.86% assigned return rate for a 64.00% annualized return rate (for comparison purposes only). Plains Exploration and Production does not pay dividends at this time. [ATU-Seven Summits Research]