Alcon (ACL) PriceWatch Alert At $160.03 Break Even

Posted on Thursday, October 02, 2008 8:07 AM

Alcon (NYSE: ACL) closed yesterday at $164.73. So far the stock has hit a 52-week low of $126.79 and 52-week high of $178.56. Alcon stock has been showing support around 158.74 and resistance in the 167.96 range. Technical indicators for the stock are Bearish and S&P gives ACL a neutral 3 STAR (out of 5) hold rating. ACL appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at a Nov '08 170 covered call (ACL KN) for a net debit in the $160.03 area. That is also the break even stock price for this trade. This covered call has a 51 day duration, provides 2.85% downside protection and a 6.23% assigned return rate for a 44.59% 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 ACL Jan '10 110 Call (LVY AB) and selling the Nov '08 170 call (ACL KN) for a $54.55 debit. The trade has a 51 day life and would provide 0.11% downside protection and a 9.99% assigned return rate for a 72.00% annualized return rate (for comparison purposes only). Alcon has a current annual dividend yield of 1.53%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]