Occidental Petroleum (OXY) PriceWatch Alert Down To $72.90 Break Even

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

Occidental Petroleum (NYSE: OXY) closed yesterday at $77.00. So far the stock has hit a 52-week low of $50.66 and 52-week high of $100.04. Occidental Petroleum stock has been showing support around 74.11 and resistance in the 80.91 range. Technical indicators for the stock are Bearish and S&P gives OXY a positive 4 STAR (out of 5) buy rating. OXY appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at a Sep '08 80 covered call (OXY IP) for a net debit in the $72.90 area. That is also the break even stock price for this trade. This covered call has a 59 day duration, provides 5.32% downside protection and a 9.74% assigned return rate for a 60.25% 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 OXY Jan '09 60 Call (OXY AL) and selling the Sep '08 80 call (OXY IP) for a $15.55 debit. The trade has a 59 day life and would provide 1.88% downside protection and a 28.62% assigned return rate for a 177.00% annualized return rate (for comparison purposes only). Occidental Petroleum 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]