Marathon Oil (MRO) PriceWatch Alert Support Down To $42.69

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

Marathon Oil (NYSE: MRO) closed yesterday at $43.78. So far the stock has hit a 52-week low of $42.77 and 52-week high of $63.22. Marathon Oil stock has been showing support around 42.69 and resistance in the 44.69 range. Technical indicators for the stock are Bearish and S&P gives MRO a positive 4 STAR (out of 5) buy rating. MRO appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at an Oct '08 40 covered call (MRO JH) for a net debit in the $38.48 area. That is also the break even stock price for this trade. This covered call has an 87 day duration, provides 12.11% downside protection and a 3.95% assigned return rate for a 16.57% 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 MRO Jan '09 30 Call (MRO AF) and selling the Oct '08 40 call (MRO JH) for a $9.05 debit. The trade has an 87 day life and would provide 10.80% downside protection and a 10.50% assigned return rate for a 44.00% annualized return rate (for comparison purposes only). Marathon Oil 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]