Chevron (CVX) PriceWatch Alert Targets 42.64% Return

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

Chevron (NYSE: CVX) closed yesterday at $86.32. So far the stock has hit a 52-week low of $76.40 and 52-week high of $104.63. Chevron stock has been showing support around 85.11 and resistance in the 88.33 range. Technical indicators for the stock are Bearish and S&P gives CVX a very positive 5 STAR (out of 5) strong buy rating. CVX appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at a Dec '08 95 covered call (CVX LS) for a net debit in the $84.27 area. That is also the break even stock price for this trade. This covered call has a 109 day duration, provides 2.37% downside protection and a 12.73% assigned return rate for a 42.64% 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 CVX Jan '10 70 Call (WCH AN) and selling the Dec '08 95 call (CVX LS) for an $18.75 debit. The trade has a 109 day life and would provide no downside protection and a 33.33% assigned return rate for an 112.00% annualized return rate (for comparison purposes only). Chevron has a current annual dividend yield of 3.03%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]