Teva Pharmaceutical (TEVA) PriceWatch Alert Down To $47.80 Break Even

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

Teva Pharmaceutical (NasdaqNM: TEVA) closed yesterday at $49.70. So far the stock has hit a 52-week low of $35.89 and 52-week high of $50.35. Teva Pharmaceutical stock has been showing support around 48.82 and resistance in the 50.54 range. Technical indicators for the stock are Bullish and S&P gives TEVA a very positive 5 STAR (out of 5) strong buy rating. TEVA appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Sep '09 50 covered call (TVQ IJ) for a net debit in the $47.80 area. That is also the break even stock price for this trade. This covered call has a 75 day duration, provides 3.82% downside protection and a 4.60% assigned return rate for a 22.40% 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 TEVA Jan '11 30 Call (OQV AF) and selling the Sep '09 50 call (TVQ IJ) for an $18.25 debit. The trade has a 75 day life and would provide 2.92% downside protection and a 9.59% assigned return rate for a 47.00% annualized return rate (for comparison purposes only). Teva Pharmaceutical has a current annual dividend yield of 0.89%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]

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