ConAgra Foods (CAG) 9/8/09 PriceWatch Alert Up To 8.20% Downside Protection

Posted: Tuesday, September 08, 2009 8:24 AM EDT
By: Market Intelligence Center Staff

ConAgra Foods (NYSE: CAG) ended the last trading session at $20.72. So far the stock has hit a 52-week low of $13.52 and 52-week high of $20.74. ConAgra Foods stock has been showing support around 19.64 and resistance in the 21.28 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 Mar '10 20 covered call (CAG CD) 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 193 day duration, provides 8.20% downside protection and a 5.15% assigned return rate for a 9.74% 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 Mar '10 20 call (CAG CD) for a $4.20 debit. The trade has a 193 day life and would provide 7.34% downside protection and a 19.05% assigned return rate for a 36.00% annualized return rate (for comparison purposes only). ConAgra Foods has a current annual dividend yield of 3.82%. [ATU-Seven Summits Research] For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo