Alcon (ACL) Showing Bullish Technicals With 2.12% Dividend Yield

Posted: Wednesday, September 01, 2010 9:07 AM EDT
By: Market Intelligence Center Staff

Alcon (NYSE: ACL) closed yesterday at $162.20. So far the stock has hit a 52-week low of $127.19 and 52-week high of $166.71. Alcon stock has been showing support around 160.53 and resistance in the 163.07 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 Nov '10 170 covered call for a net debit in the $159.94 area. That is also the break even stock price for this trade. This covered call has an 80 day duration, provides 1.39% downside protection and a 6.29% assigned return rate for a 28.70% 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 '12 120 Call and selling the Nov '10 170 call for a $42.14 debit. The trade has an 80 day life and would provide 0.04% downside protection and an 18.65% assigned return rate for an 85.00% annualized return rate (for comparison purposes only). Alcon has a current annual dividend yield of 2.12%. [WBA-Seven Summits Research]