Suncor Energy (SU) PriceWatch Alert Targets 32.46% Return

Posted on Tuesday, September 02, 2008 8:07 AM

Suncor Energy (NYSE: SU) closed yesterday at $56.84. So far the stock has hit a 52-week low of $39.67 and 52-week high of $74.28. Suncor Energy stock has been showing support around 55.13 and resistance in the 58.45 range. Technical indicators for the stock are Neutral and S&P gives SU a positive 4 STAR (out of 5) buy rating. SU appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at a Dec '08 55 covered call (SU LK) for a net debit in the $50.14 area. That is also the break even stock price for this trade. This covered call has a 109 day duration, provides 11.79% downside protection and a 9.69% assigned return rate for a 32.46% 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 SU Jan '10 30 Call (YYU AX) and selling the Dec '08 55 call (SU LK) for a $22.50 debit. The trade has a 109 day life and would provide 7.64% downside protection and an 11.11% assigned return rate for a 37.00% annualized return rate (for comparison purposes only). Suncor Energy has a current annual dividend yield of 0.36%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]