Owens Illinois (OI) PriceWatch Alert Up To 20.78% Downside Protection

Posted: Monday, July 06, 2009 8:07 AM EDT
By: Market Intelligence Center Staff

Owens Illinois (NYSE: OI) closed yesterday at $27.91. So far the stock has hit a 52-week low of $9.53 and 52-week high of $48.60. Owens Illinois stock has been showing support around 27.18 and resistance in the 28.84 range. Technical indicators for the stock are Bullish and S&P gives OI a neutral 3 STAR (out of 5) hold rating. OI appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Jan '10 25 covered call (OI AE) for a net debit in the $22.11 area. That is also the break even stock price for this trade. This covered call has a 194 day duration, provides 20.78% downside protection and a 13.07% assigned return rate for a 24.59% 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 OI Jan '11 5 Call (ZQL AA) and selling the Jan '10 25 call (OI AE) for a $17.55 debit. The trade has a 194 day life and would provide 19.20% downside protection and a 13.96% assigned return rate for a 26.00% annualized return rate (for comparison purposes only). Owens Illinois does not pay dividends at this time. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]