China Telecom (CHA) PriceWatch Alert Support At Around $30.76

Posted: Friday, November 14, 2008 8:07 AM EDT
By: Market Intelligence Center Staff

China Telecom (NYSE: CHA) closed yesterday at $38.09. So far the stock has hit a 52-week low of $25.89 and 52-week high of $92.01. China Telecom stock has been showing support around 30.76 and resistance in the 41.92 range. Technical indicators for the stock are Bearish and S&P gives CHA a neutral 3 STAR (out of 5) hold rating. CHA appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jan '09 30 covered call (CHA AF) for a net debit in the $28.19 area. That is also the break even stock price for this trade. This covered call has a 64 day duration, provides 25.99% downside protection and a 6.42% assigned return rate for a 36.62% 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 CHA Jan '10 17.50 Call (LNJ AW) and selling the Jan '09 30 call (CHA AF) for an $11.40 debit. The trade has a 64 day life and would provide 24.13% downside protection and a 9.65% assigned return rate for a 55.00% annualized return rate (for comparison purposes only). China Telecom has a current annual dividend yield of 3.15%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]