Owens Illinois (OI) 10/29/09 PriceWatch Alert With $28.11 Break Even

Posted: Thursday, October 29, 2009 8:08 AM EDT
By: Market Intelligence Center Staff

Owens Illinois (NYSE: OI) closed yesterday at $33.51. So far the stock has hit a 52-week low of $9.53 and 52-week high of $39.56. Owens Illinois stock has been showing support around 31.30 and resistance in the 36.24 range. Technical indicators for the stock are Bearish and S&P gives OI a positive 4 STAR (out of 5) buy rating. OI appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Feb '10 30 covered call (OI BF) for a net debit in the $28.11 area. That is also the break even stock price for this trade. This covered call has an 114 day duration, provides 16.11% downside protection and a 6.72% assigned return rate for a 21.53% 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 OI Jan '11 10 Call (ZQL AB) and selling the Feb '10 30 call (OI BF) for an $18.45 debit. The trade has an 114 day life and would provide 15.10% downside protection and an 8.40% assigned return rate for a 27.00% annualized return rate (for comparison purposes only). Owens Illinois does not pay dividends at this time. [THA-Seven Summits Research]