China Petroleum and Chemcial (SNP) 11/3/09 PriceWatch Alert At $80.02 Break Even

Posted: Tuesday, November 03, 2009 8:43 AM EDT
By: Market Intelligence Center Staff

China Petroleum and Chemcial (NYSE: SNP) closed yesterday at $85.72. So far the stock has hit a 52-week low of $46.45 and 52-week high of $94.00. China Petroleum and Chemcial stock has been showing support around 83.27 and resistance in the 88.23 range. Technical indicators for the stock are Neutral. SNP appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Jan '10 85 covered call (SNP AQ) for a net debit in the $80.02 area. That is also the break even stock price for this trade. This covered call has a 74 day duration, provides 6.65% downside protection and a 6.22% assigned return rate for a 30.70% 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 SNP Jan '11 40 Call (ZPJ AH) and selling the Jan '10 85 call (SNP AQ) for a $40.75 debit. The trade has a 74 day life and would provide 5.80% downside protection and a 10.43% assigned return rate for a 51.00% annualized return rate (for comparison purposes only). China Petroleum and Chemcial has a current annual dividend yield of 2.37%. [ATU-Seven Summits Research]