Southern Copper (PCU) PriceWatch Alert Down To $13.89 Break Even

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

Southern Copper (NYSE: PCU) closed yesterday at $19.59. So far the stock has hit a 52-week low of $9.12 and 52-week high of $34.74. Southern Copper stock has been showing support around 19.32 and resistance in the 20.12 range. Technical indicators for the stock are Bearish. PCU appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Dec '09 15 covered call (PCU LC) for a net debit in the $13.89 area. That is also the break even stock price for this trade. This covered call has a 166 day duration, provides 29.10% downside protection and a 7.99% assigned return rate for a 17.57% 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 PCU Jan '11 7.50 Call (XBW AU) and selling the Dec '09 15 call (PCU LC) for a $7.15 debit. The trade has a 166 day life and would provide 25.22% downside protection and a 4.90% assigned return rate for an 11.00% annualized return rate (for comparison purposes only). Southern Copper has a current annual dividend yield of 0.87%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]