Hess (HES) PriceWatch Alert Targets 39.26% Return

Posted on Wednesday, July 23, 2008 8:07 AM

Hess (NYSE: HES) closed yesterday at $97.78. So far the stock has hit a 52-week low of $53.12 and 52-week high of $137.00. Hess stock has been showing support around 93.86 and resistance in the 104.20 range. Technical indicators for the stock are Bearish and S&P gives HES a neutral 3 STAR (out of 5) hold rating. HES appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at a Nov '08 95 covered call (IGG KS) for a net debit in the $83.98 area. That is also the break even stock price for this trade. This covered call has a 122 day duration, provides 14.11% downside protection and a 13.12% assigned return rate for a 39.26% 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 HES Jan '09 75 Call (IGG AO) and selling the Nov '08 95 call (IGG KS) for a $14.50 debit. The trade has a 122 day life and would provide 8.47% downside protection and a 37.93% assigned return rate for an 113.00% annualized return rate (for comparison purposes only). Hess 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]