Schering Plough (SGP) PriceWatch Alert At $22.72 Break Even

Posted: Monday, July 06, 2009 8:07 AM EDT

Schering Plough (NYSE: SGP) closed yesterday at $24.62. So far the stock has hit a 52-week low of $11.97 and 52-week high of $25.29. Schering Plough stock has been showing support around 24.17 and resistance in the 25.35 range. Technical indicators for the stock are Bullish and S&P gives SGP a neutral 3 STAR (out of 5) hold rating. SGP appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Nov '09 24 covered call (SGP KA) for a net debit in the $22.72 area. That is also the break even stock price for this trade. This covered call has a 138 day duration, provides 7.72% downside protection and a 5.63% assigned return rate for a 14.90% 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 SGP Jan '11 12.50 Call (VSG AV) and selling the Nov '09 24 call (SGP KA) for a $10.60 debit. The trade has a 138 day life and would provide 6.17% downside protection and an 8.49% assigned return rate for a 22.00% annualized return rate (for comparison purposes only). Schering Plough has a current annual dividend yield of 1.04%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]

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