Goldcorp (GG) 10/26/09 PriceWatch Alert With $36.01 Break Even

Posted: Monday, October 26, 2009 8:19 AM EDT
By: Market Intelligence Center Staff

Goldcorp (NYSE: GG) ended the last trading session at $40.01. So far the stock has hit a 52-week low of $13.84 and 52-week high of $43.41. Goldcorp stock has been showing support around 38.82 and resistance in the 41.92 range. Technical indicators for the stock are Bullish. GG appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at an Apr '10 42 covered call (GAG DP) for a net debit in the $36.01 area. That is also the break even stock price for this trade. This covered call has a 173 day duration, provides 10.00% downside protection and a 16.63% assigned return rate for a 35.10% 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 GG Jan '11 22.50 Call (OPJ AX) and selling the Apr '10 42 call (GAG DP) for a $15.55 debit. The trade has a 173 day life and would provide 4.90% downside protection and a 25.40% assigned return rate for a 54.00% annualized return rate (for comparison purposes only). Goldcorp has a current annual dividend yield of 0.44%. [ABR-Seven Summits Research]