Exxon Mobil (XOM) PriceWatch Alert Up To 3.17% Downside Protection

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

Exxon Mobil (NYSE: XOM) closed yesterday at $82.86. So far the stock has hit a 52-week low of $77.55 and 52-week high of $96.12. Exxon Mobil stock has been showing support around 80.89 and resistance in the 84.21 range. Technical indicators for the stock are Bearish and S&P gives XOM a positive 4 STAR (out of 5) buy rating. XOM appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Sep '08 85 covered call (XOM IQ) for a net debit in the $80.23 area. That is also the break even stock price for this trade. This covered call has a 59 day duration, provides 3.17% downside protection and a 5.95% assigned return rate for a 36.78% 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 XOM Jan '09 70 Call (XOM AN) and selling the Sep '08 85 call (XOM IQ) for a $12.17 debit. The trade has a 59 day life and would provide 0.83% downside protection and a 23.25% assigned return rate for a 144.00% annualized return rate (for comparison purposes only). Exxon Mobil 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]