Cameron International (CAM) 10/29/09 PriceWatch Alert With $33.96 Break Even

Posted: Thursday, October 29, 2009 8:21 AM EDT
By: Market Intelligence Center Staff

Cameron International (NYSE: CAM) closed yesterday at $37.56. So far the stock has hit a 52-week low of $16.15 and 52-week high of $42.39. Cameron International stock has been showing support around 36.37 and resistance in the 39.73 range. Technical indicators for the stock are Bearish and S&P gives CAM a neutral 3 STAR (out of 5) hold rating. CAM appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at a Feb '10 37.50 covered call (CAM BT) for a net debit in the $33.96 area. That is also the break even stock price for this trade. This covered call has an 114 day duration, provides 9.58% downside protection and a 10.42% assigned return rate for a 33.38% 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 CAM Jan '11 15 Call (OKA AC) and selling the Feb '10 37.50 call (CAM BT) for a $20.80 debit. The trade has an 114 day life and would provide 4.69% downside protection and an 8.17% assigned return rate for a 26.00% annualized return rate (for comparison purposes only). Cameron International does not pay dividends at this time. [THA-Seven Summits Research]