BJ Services (BJS) 11/3/09 PriceWatch Alert Technicals Showing Neutral

Posted: Tuesday, November 03, 2009 8:39 AM EDT
By: Market Intelligence Center Staff

BJ Services (NYSE: BJS) closed yesterday at $19.30. So far the stock has hit a 52-week low of $8.34 and 52-week high of $21.59. BJ Services stock has been showing support around 18.51 and resistance in the 20.11 range. Technical indicators for the stock are Neutral and S&P gives BJS a neutral 3 STAR (out of 5) hold rating. BJS appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at an Apr '10 19 covered call (BJS DU) for a net debit in the $17.45 area. That is also the break even stock price for this trade. This covered call has a 165 day duration, provides 9.59% downside protection and an 8.88% assigned return rate for a 19.65% 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 BJS Jan '11 5 Call (VDL AA) and selling the Apr '10 19 call (BJS DU) for a $12.90 debit. The trade has a 165 day life and would provide 7.25% downside protection and an 8.53% assigned return rate for a 19.00% annualized return rate (for comparison purposes only). BJ Services has a current annual dividend yield of 1.00%. [ATU-Seven Summits Research]