Archer Daniels Midland (ADM) 2/9/10 PriceWatch Alert Could Hit 15.42% Return

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

Archer Daniels Midland (NYSE: ADM) closed yesterday at $29.89. So far the stock has hit a 52-week low of $23.13 and 52-week high of $33.00. Archer Daniels Midland stock has been showing support around 29.27 and resistance in the 31.05 range. Technical indicators for the stock are Bearish and S&P gives ADM a neutral 3 STAR (out of 5) hold rating. ADM appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jun '10 29 covered call for a net debit in the $27.49 area. That is also the break even stock price for this trade. This covered call has a 130 day duration, provides 8.03% downside protection and a 5.49% assigned return rate for a 15.42% 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 ADM Jan '11 20 Call and selling the Jun '10 29 call for an $8.00 debit. The trade has a 130 day life and would provide 6.32% downside protection and a 12.50% assigned return rate for a 35.00% annualized return rate (for comparison purposes only). Archer Daniels Midland has a current annual dividend yield of 1.86%. [ATU-Seven Summits Research]