Alcon (ACL) PriceWatch Alert With Support Around $129.03

Posted on Friday, October 10, 2008 8:07 AM

Alcon (NYSE: ACL) closed yesterday at $138.22. 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 129.03 and resistance in the 154.55 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 Jan '09 145 covered call (ACL AI) for a net debit in the $130.12 area. That is also the break even stock price for this trade. This covered call has a 99 day duration, provides 5.86% downside protection and an 11.44% assigned return rate for a 42.16% 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 90 Call (LVY AR) and selling the Jan '09 145 call (ACL AI) for a $46.10 debit. The trade has a 99 day life and would provide 1.53% downside protection and a 19.31% assigned return rate for a 71.00% annualized return rate (for comparison purposes only). Alcon has a current annual dividend yield of 1.68%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]