Schering Plough (SGP) PriceWatch Alert With Support Around $18.16

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

Schering Plough (NYSE: SGP) ended the last trading session at $19.26. So far the stock has hit a 52-week low of $13.83 and 52-week high of $33.40. Schering Plough stock has been showing support around 18.16 and resistance in the 19.84 range. Technical indicators for the stock are Bearish and S&P gives SGP a neutral 3 STAR (out of 5) hold rating. SGP appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Jan '09 17.50 covered call (SGP AW) for a net debit in the $16.36 area. That is also the break even stock price for this trade. This covered call has a 131 day duration, provides 15.06% downside protection and a 6.97% assigned return rate for a 19.42% 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 SGP Jan '10 7.50 Call (WSG AU) and selling the Jan '09 17.50 call (SGP AW) for an $8.95 debit. The trade has a 131 day life and would provide 14.59% downside protection and an 11.73% assigned return rate for a 33.00% annualized return rate (for comparison purposes only). Schering Plough has a current annual dividend yield of 1.36%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]