Alcon (ACL) 2/9/10 PriceWatch Alert Down To $154.16 Break Even

Posted: Tuesday, February 09, 2010 8:19 AM EDT
By: Market Intelligence Center Staff

Alcon (NYSE: ACL) closed yesterday at $156.11. So far the stock has hit a 52-week low of $76.03 and 52-week high of $166.71. Alcon stock has been showing support around 154.72 and resistance in the 157.92 range. Technical indicators for the stock are Neutral and S&P gives ACL a neutral 3 STAR (out of 5) hold rating. ACL appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at a May '10 165 covered call for a net debit in the $154.16 area. That is also the break even stock price for this trade. This covered call has a 102 day duration, provides 1.25% downside protection and a 7.03% assigned return rate for a 25.16% 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 ACL Jan '11 140 Call and selling the May '10 165 call for a $19.00 debit. The trade has a 102 day life and would provide no downside protection and a 31.58% assigned return rate for an 113.00% annualized return rate (for comparison purposes only). Alcon has a current annual dividend yield of 2.31%. [ATU-Seven Summits Research]