Massey Energy (MEE) PriceWatch Alert With Support Around $46.05

Posted on Monday, September 08, 2008 8:07 AM

Massey Energy (NYSE: MEE) ended the last trading session at $53.94. So far the stock has hit a 52-week low of $21.04 and 52-week high of $95.70. Massey Energy stock has been showing support around 46.05 and resistance in the 58.35 range. Technical indicators for the stock are Bearish and S&P gives MEE a positive 4 STAR (out of 5) buy rating. MEE appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Jan '09 50 covered call (MEE AJ) for a net debit in the $41.94 area. That is also the break even stock price for this trade. This covered call has a 131 day duration, provides 22.25% downside protection and a 19.22% assigned return rate for a 53.55% 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 MEE Jan '10 15 Call (YBH AC) and selling the Jan '09 50 call (MEE AJ) for a $28.10 debit. The trade has a 131 day life and would provide 20.10% downside protection and a 24.56% assigned return rate for a 68.00% annualized return rate (for comparison purposes only). Massey Energy has a current annual dividend yield of 0.34%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]