Allegheny Technologies (ATI) Makes Investors Observer Hedged Dividend Income List

Posted: Friday, March 05, 2010 8:42 AM EDT
By: Market Intelligence Center Staff

Allegheny Technologies (NYSE: ATI) closed yesterday at $47.49. So far the stock has hit a 52-week low of $16.92 and 52-week high of $53.39. Allegheny Technologies stock has been showing support around 45.86 and resistance in the 49.26 range. Technical indicators for the stock are Bullish and S&P gives ATI a weak 2 STAR (out of 5) sell rating. ATI appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Jul '10 47 covered call for a net debit in the $42.39 area. That is also the break even stock price for this trade. This covered call has a 134 day duration, provides 10.74% downside protection and a 10.88% assigned return rate for a 29.62% 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 ATI Jan '11 30 Call and selling the Jul '10 47 call for a $13.75 debit. The trade has a 134 day life and would provide 7.88% downside protection and a 23.64% assigned return rate for a 64.00% annualized return rate (for comparison purposes only). Allegheny Technologies has a current annual dividend yield of 1.55%. [FBB-Seven Summits Research]