BP (BP) PriceWatch Alert for October 30, 2009

Posted: Friday, October 30, 2009 8:18 AM EDT
By: Market Intelligence Center Staff

BP (NYSE: BP) closed yesterday at $58.30. So far the stock has hit a 52-week low of $33.70 and 52-week high of $58.50. BP stock has been showing support around 57.35 and resistance in the 58.97 range. Technical indicators for the stock are Bullish and S&P gives BP a neutral 3 STAR (out of 5) hold rating. BP appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Dec '09 60 covered call (BUP LL) for a net debit in the $57.15 area. That is also the break even stock price for this trade. This covered call has a 50 day duration, provides 1.97% downside protection and a 4.99% assigned return rate for a 36.40% 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 BP Jan '11 45 Call (VAO AI) and selling the Dec '09 60 call (BUP LL) for a $12.65 debit. The trade has a 50 day life and would provide 1.11% downside protection and an 18.58% assigned return rate for a 136.00% annualized return rate (for comparison purposes only). BP has a current annual dividend yield of 5.81%. [FBB-Seven Summits Research]