Molson Coors Brewing (TAP) PriceWatch Alert Could Hit 22.32% Return

Posted: Wednesday, June 10, 2009 8:07 AM EDT

Molson Coors Brewing (NYSE: TAP) closed yesterday at $44.71. So far the stock has hit a 52-week low of $30.76 and 52-week high of $59.00. Molson Coors Brewing stock has been showing support around 44.09 and resistance in the 45.87 range. Technical indicators for the stock are Bullish and S&P gives TAP a positive 4 STAR (out of 5) buy rating. TAP appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at an Oct '09 45 covered call (TAP JI) for a net debit in the $41.71 area. That is also the break even stock price for this trade. This covered call has a 129 day duration, provides 6.71% downside protection and a 7.89% assigned return rate for a 22.32% 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 TAP Jan '10 35 Call (TAP AG) and selling the Oct '09 45 call (TAP JI) for a $7.85 debit. The trade has a 129 day life and would provide 4.16% downside protection and a 27.39% assigned return rate for a 77.00% annualized return rate (for comparison purposes only). Molson Coors Brewing has a current annual dividend yield of 2.10%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]

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