Anadarko Petroleum (APC) 11/3/09 PriceWatch Alert With $55.74 Break Even

Posted: Tuesday, November 03, 2009 8:45 AM EDT
By: Market Intelligence Center Staff

Anadarko Petroleum (NYSE: APC) closed yesterday at $61.84. So far the stock has hit a 52-week low of $29.00 and 52-week high of $69.37. Anadarko Petroleum stock has been showing support around 59.91 and resistance in the 63.85 range. Technical indicators for the stock are Neutral and S&P gives APC a neutral 3 STAR (out of 5) hold rating. APC appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jan '10 60 covered call (AZW AL) for a net debit in the $55.74 area. That is also the break even stock price for this trade. This covered call has a 74 day duration, provides 9.86% downside protection and a 7.64% assigned return rate for a 37.70% 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 APC Jan '11 30 Call (OCP AF) and selling the Jan '10 60 call (AZW AL) for a $26.50 debit. The trade has a 74 day life and would provide 8.64% downside protection and a 13.21% assigned return rate for a 65.00% annualized return rate (for comparison purposes only). Anadarko Petroleum has a current annual dividend yield of 0.56%. [ATU-Seven Summits Research]