Rio Tinto PLC (RTP) 3/19/10 PriceWatch Alert Down To $204.87 Break Even

Posted: Friday, March 19, 2010 8:45 AM EDT
By: Market Intelligence Center Staff

Rio Tinto PLC (NYSE: RTP) closed yesterday at $227.67. So far the stock has hit a 52-week low of $113.08 and 52-week high of $240.43. Rio Tinto PLC stock has been showing support around 223.84 and resistance in the 233.20 range. Technical indicators for the stock are Bullish and S&P gives RTP a positive 4 STAR (out of 5) buy rating. RTP appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at a Jul '10 220 covered call for a net debit in the $204.87 area. That is also the break even stock price for this trade. This covered call has a 120 day duration, provides 10.01% downside protection and a 7.39% assigned return rate for a 22.46% 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 RTP Jan '11 140 Call and selling the Jul '10 220 call for a $68.15 debit. The trade has a 120 day life and would provide 8.57% downside protection and a 17.39% assigned return rate for a 53.00% annualized return rate (for comparison purposes only). Rio Tinto PLC has a current annual dividend yield of 0.79%. [FBB-Seven Summits Research]