AstraZeneca (AZN) 10/23/09 PriceWatch Alert With 4.89% Downside Protection

Posted: Friday, October 23, 2009 8:30 AM EDT
By: Market Intelligence Center Staff

AstraZeneca (NYSE: AZN) closed yesterday at $46.00. So far the stock has hit a 52-week low of $29.96 and 52-week high of $47.61. AstraZeneca stock has been showing support around 45.26 and resistance in the 46.38 range. Technical indicators for the stock are Bullish and S&P gives AZN a neutral 3 STAR (out of 5) hold rating. AZN appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Dec '09 45 covered call (AZN LI) for a net debit in the $43.75 area. That is also the break even stock price for this trade. This covered call has a 57 day duration, provides 4.89% downside protection and a 2.86% assigned return rate for an 18.30% 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 AZN Jan '11 30 Call (OXU AF) and selling the Dec '09 45 call (AZN LI) for a $13.90 debit. The trade has a 57 day life and would provide 4.57% downside protection and a 7.91% assigned return rate for a 51.00% annualized return rate (for comparison purposes only). AstraZeneca has a current annual dividend yield of 4.64%. [FBB-Seven Summits Research]