HSBC PLC (HBC) PriceWatch Alert With Support Around $74.73

Posted on Friday, July 18, 2008 8:07 AM

HSBC PLC (NYSE: HBC) closed yesterday at $77.26. So far the stock has hit a 52-week low of $69.25 and 52-week high of $99.52. HSBC PLC stock has been showing support around 74.73 and resistance in the 79.35 range. Technical indicators for the stock are Bearish and S&P gives HBC a weak 2 STAR (out of 5) sell rating. HBC appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Sep '08 75 covered call (HBC IO) for a net debit in the $72.46 area. That is also the break even stock price for this trade. This covered call has a 64 day duration, provides 6.21% downside protection and a 3.51% assigned return rate for a 19.99% 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 HBC Jan '09 60 Call (HBC AL) and selling the Sep '08 75 call (HBC IO) for a $13.70 debit. The trade has a 64 day life and would provide 4.61% downside protection and a 9.49% assigned return rate for a 54.00% annualized return rate (for comparison purposes only). HSBC PLC does not pay dividends at this time. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]