BHP Billiton (BHP) 11/3/09 PriceWatch Alert Technicals Showing Bearish

Posted: Tuesday, November 03, 2009 8:29 AM EDT
By: Market Intelligence Center Staff

BHP Billiton (NYSE: BHP) closed yesterday at $66.48. So far the stock has hit a 52-week low of $24.53 and 52-week high of $74.98. BHP Billiton stock has been showing support around 63.89 and resistance in the 68.87 range. Technical indicators for the stock are Bearish. BHP appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jan '10 65 covered call (BHP AM) for a net debit in the $60.78 area. That is also the break even stock price for this trade. This covered call has a 74 day duration, provides 8.57% downside protection and a 6.94% assigned return rate for a 34.25% 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 BHP Jan '11 35 Call (ZPK AG) and selling the Jan '10 65 call (BHP AM) for a $26.30 debit. The trade has a 74 day life and would provide 7.79% downside protection and a 14.07% assigned return rate for a 69.00% annualized return rate (for comparison purposes only). BHP Billiton has a current annual dividend yield of 2.37%. [ATU-Seven Summits Research]