Cemex (CX) 10/15/09 PriceWatch Alert Down To $10.97 Break Even

Posted: Thursday, October 15, 2009 8:28 AM EDT
By: Market Intelligence Center Staff

Cemex (NYSE: CX) closed yesterday at $13.92. So far the stock has hit a 52-week low of $3.94 and 52-week high of $14.58. Cemex stock has been showing support around 13.41 and resistance in the 14.17 range. Technical indicators for the stock are Bullish. CX appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at an Apr '10 12 covered call (CX DL) for a net debit in the $10.97 area. That is also the break even stock price for this trade. This covered call has an 184 day duration, provides 21.19% downside protection and a 9.39% assigned return rate for an 18.63% 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 CX Jan '11 5 Call (OXX AA) and selling the Apr '10 12 call (CX DL) for a $6.10 debit. The trade has an 184 day life and would provide 20.26% downside protection and a 14.75% assigned return rate for a 29.00% annualized return rate (for comparison purposes only). Cemex does not pay dividends at this time. [THA-Seven Summits Research]