ConocoPhillips (COP) 10/29/09 PriceWatch Alert Targets 38.62% Return

Posted: Thursday, October 29, 2009 8:40 AM EDT

ConocoPhillips (NYSE: COP) closed yesterday at $49.49. So far the stock has hit a 52-week low of $34.12 and 52-week high of $57.44. ConocoPhillips stock has been showing support around 47.99 and resistance in the 52.05 range. Technical indicators for the stock are Bullish and S&P gives COP a very positive 5 STAR (out of 5) strong buy rating. COP appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Dec '09 50 covered call (COP LJ) for a net debit in the $47.44 area. That is also the break even stock price for this trade. This covered call has a 51 day duration, provides 4.14% downside protection and a 5.40% assigned return rate for a 38.62% 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 COP Jan '11 30 Call (OJP AF) and selling the Dec '09 50 call (COP LJ) for a $17.75 debit. The trade has a 51 day life and would provide 3.52% downside protection and a 12.68% assigned return rate for a 91.00% annualized return rate (for comparison purposes only). ConocoPhillips has a current annual dividend yield of 3.71%. [THA-Seven Summits Research]

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