AngloGold Ashanti (AU) PriceWatch Alert With 15.90% Downside Protection

Posted: Thursday, May 21, 2009 8:07 AM EDT
By: Market Intelligence Center Staff

AngloGold Ashanti (NYSE: AU) closed yesterday at $37.11. So far the stock has hit a 52-week low of $13.37 and 52-week high of $40.17. AngloGold Ashanti stock has been showing support around 35.46 and resistance in the 38.52 range. Technical indicators for the stock are Bullish. AU appears on the Investors Observer Stocks In The News list. UBS downgraded AU Monday to Neutral from Buy. For a hedged play on this stock, look at an Oct '09 35 covered call (AU JG) for a net debit in the $31.21 area. That is also the break even stock price for this trade. This covered call has a 149 day duration, provides 15.90% downside protection and a 12.14% assigned return rate for a 29.75% 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 AU Jan '10 25 Call (AU AE) and selling the Oct '09 35 call (AU JG) for a $7.90 debit. The trade has a 149 day life and would provide 11.34% downside protection and a 26.58% assigned return rate for a 65.00% annualized return rate (for comparison purposes only). AngloGold Ashanti has a current annual dividend yield of 0.35%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]