ConAgra Foods (CAG) 9/2/09 PriceWatch Alert With $19.02 Break Even

Posted: Wednesday, September 02, 2009 8:22 AM EDT
By: Market Intelligence Center Staff

ConAgra Foods (NYSE: CAG) closed yesterday at $20.12. So far the stock has hit a 52-week low of $13.52 and 52-week high of $21.73. ConAgra Foods stock has been showing support around 19.71 and resistance in the 20.85 range. Technical indicators for the stock are Bullish and S&P gives CAG a neutral 3 STAR (out of 5) hold rating. CAG appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Dec '09 20 covered call (CAG LD) for a net debit in the $19.02 area. That is also the break even stock price for this trade. This covered call has a 108 day duration, provides 5.47% downside protection and a 5.15% assigned return rate for a 17.41% 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 CAG Jan '11 15 Call (OYH AC) and selling the Dec '09 20 call (CAG LD) for a $4.50 debit. The trade has a 108 day life and would provide 3.08% downside protection and an 11.11% assigned return rate for a 38.00% annualized return rate (for comparison purposes only). ConAgra Foods has a current annual dividend yield of 3.72%. [WBA-Seven Summits Research] For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo