Teva Pharmaceutical (TEVA) PriceWatch Alert With $46.06 Break Even

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

Teva Pharmaceutical (NasdaqNM: TEVA) ended the last trading session at $47.56. So far the stock has hit a 52-week low of $40.37 and 52-week high of $50.00. Teva Pharmaceutical stock has been showing support around 46.85 and resistance in the 48.19 range. Technical indicators for the stock are Bullish and S&P gives TEVA a very positive 5 STAR (out of 5) strong buy rating. TEVA appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Dec '08 50 covered call (TVQ LJ) for a net debit in the $46.06 area. That is also the break even stock price for this trade. This covered call has a 103 day duration, provides 3.15% downside protection and an 8.55% assigned return rate for a 30.31% 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 TEVA Jan '10 30 Call (WTX AF) and selling the Dec '08 50 call (TVQ LJ) for a $17.55 debit. The trade has a 103 day life and would provide 0.02% downside protection and a 13.96% assigned return rate for a 49.00% annualized return rate (for comparison purposes only). Teva Pharmaceutical has a current annual dividend yield of 1.09%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]