ConocoPhillips (COP) PriceWatch Alert Down To $80.37 Break Even

Posted on Thursday, August 28, 2008 8:07 AM

ConocoPhillips (NYSE: COP) closed yesterday at $83.47. So far the stock has hit a 52-week low of $67.85 and 52-week high of $95.96. ConocoPhillips stock has been showing support around 82.14 and resistance in the 84.92 range. Technical indicators for the stock are Bearish and S&P gives COP a very positive 5 STAR (out of 5) strong buy rating. COP appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at an Oct '08 85 covered call (COP JQ) for a net debit in the $80.37 area. That is also the break even stock price for this trade. This covered call has a 51 day duration, provides 3.71% downside protection and a 5.76% assigned return rate for a 41.23% 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 COP Jan '10 50 Call (YRO AJ) and selling the Oct '08 85 call (COP JQ) for a $31.50 debit. The trade has a 51 day life and would provide 2.36% downside protection and an 11.11% assigned return rate for an 80.00% annualized return rate (for comparison purposes only). ConocoPhillips has a current annual dividend yield of 2.26%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]