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

Posted: Wednesday, March 17, 2010 8:44 AM EDT
By: Market Intelligence Center Staff

Allegheny Technologies (NYSE: ATI) closed yesterday at $51.54. So far the stock has hit a 52-week low of $19.15 and 52-week high of $53.39. Allegheny Technologies stock has been showing support around 50.31 and resistance in the 52.27 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 50 covered call for a net debit in the $45.84 area. That is also the break even stock price for this trade. This covered call has a 122 day duration, provides 11.06% downside protection and a 9.08% assigned return rate for a 27.15% 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 50 call for a $16.85 debit. The trade has a 122 day life and would provide 9.10% downside protection and an 18.69% assigned return rate for a 56.00% annualized return rate (for comparison purposes only). Allegheny Technologies has a current annual dividend yield of 1.42%. [WBA-Seven Summits Research]