AmerisourceBergen (ABC) 3/10/10 PriceWatch Alert With Support Around $27.76

Posted: Wednesday, March 10, 2010 8:14 AM EDT
By: Market Intelligence Center Staff

AmerisourceBergen (NYSE: ABC) closed yesterday at $27.99. So far the stock has hit a 52-week low of $13.75 and 52-week high of $28.61. AmerisourceBergen stock has been showing support around 27.76 and resistance in the 28.28 range. Technical indicators for the stock are Bullish and S&P gives ABC a positive 4 STAR (out of 5) buy rating. ABC appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Jan '11 25 covered call for a net debit in the $23.89 area. That is also the break even stock price for this trade. This covered call has a 318 day duration, provides 14.65% downside protection and a 4.65% assigned return rate for a 5.33% 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 ABC Jan '11 22.50 Call and selling the Jan '11 25 call for a $2.15 debit. The trade has a 318 day life and would provide 11.93% downside protection and a 16.28% assigned return rate for a 19.00% annualized return rate (for comparison purposes only). AmerisourceBergen has a current annual dividend yield of 1.13%. [WBA-Seven Summits Research]