Randgold Resources (GOLD) PriceWatch Alert for October 30, 2009

Posted: Friday, October 30, 2009 8:16 AM EDT
By: Market Intelligence Center Staff

Randgold Resources (NasdaqNM: GOLD) closed yesterday at $68.53. So far the stock has hit a 52-week low of $25.05 and 52-week high of $76.97. Randgold Resources stock has been showing support around 66.50 and resistance in the 70.84 range. Technical indicators for the stock are Bullish and S&P gives GOLD a neutral 3 STAR (out of 5) hold rating. GOLD appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Dec '09 70 covered call (GUD LN) for a net debit in the $64.23 area. That is also the break even stock price for this trade. This covered call has a 50 day duration, provides 6.27% downside protection and an 8.98% assigned return rate for a 65.58% 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 GOLD Jan '11 25 Call (VEJ AE) and selling the Dec '09 70 call (GUD LN) for a $40.90 debit. The trade has a 50 day life and would provide 3.84% downside protection and a 10.02% assigned return rate for a 73.00% annualized return rate (for comparison purposes only). Randgold Resources has a current annual dividend yield of 0.17%. [FBB-Seven Summits Research]