China Mobile (CHL) 10/30/09 PriceWatch Alert Down To $42.69 Break Even

Posted: Friday, October 30, 2009 8:45 AM EDT
By: Market Intelligence Center Staff

China Mobile (NYSE: CHL) closed yesterday at $48.19. So far the stock has hit a 52-week low of $38.51 and 52-week high of $59.22. China Mobile stock has been showing support around 47.24 and resistance in the 49.06 range. Technical indicators for the stock are Bearish and S&P gives CHL a neutral 3 STAR (out of 5) hold rating. CHL appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Mar '10 45 covered call (CJX CI) for a net debit in the $42.69 area. That is also the break even stock price for this trade. This covered call has a 141 day duration, provides 11.41% downside protection and a 5.41% assigned return rate for a 14.01% 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 CHL Jan '11 30 Call (ZJZ AF) and selling the Mar '10 45 call (CJX CI) for a $13.55 debit. The trade has a 141 day life and would provide 9.63% downside protection and a 10.70% assigned return rate for a 28.00% annualized return rate (for comparison purposes only). China Mobile has a current annual dividend yield of 3.30%. [FBB-Seven Summits Research]