Alcon (ACL) Gets A Neutral 3 STARs Rating From S&P

Posted: Friday, March 12, 2010 8:22 AM EDT
By: Market Intelligence Center Staff

Alcon (NYSE: ACL) closed yesterday at $163.27. So far the stock has hit a 52-week low of $83.82 and 52-week high of $166.71. Alcon stock has been showing support around 161.71 and resistance in the 164.05 range. Technical indicators for the stock are Bullish 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 '10 170 covered call for a net debit in the $162.32 area. That is also the break even stock price for this trade. This covered call has a 71 day duration, provides 0.58% downside protection and a 4.73% assigned return rate for a 24.32% 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 '11 145 Call and selling the May '10 170 call for a $19.55 debit. The trade has a 71 day life and would provide no downside protection and a 27.88% assigned return rate for a 143.00% annualized return rate (for comparison purposes only). Alcon has a current annual dividend yield of 2.24%. [FBB-Seven Summits Research]