EOG Resources (EOG) 11/3/09 PriceWatch Alert Shows Bearish Technicals

Posted: Tuesday, November 03, 2009 8:32 AM EDT
By: Market Intelligence Center Staff

EOG Resources (NYSE: EOG) closed yesterday at $81.97. So far the stock has hit a 52-week low of $45.03 and 52-week high of $95.86. EOG Resources stock has been showing support around 78.94 and resistance in the 84.82 range. Technical indicators for the stock are Bearish and S&P gives EOG a positive 4 STAR (out of 5) buy rating. EOG appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at a Jan '10 80 covered call (EOG AP) for a net debit in the $74.67 area. That is also the break even stock price for this trade. This covered call has a 74 day duration, provides 8.91% downside protection and a 7.14% assigned return rate for a 35.21% 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 EOG Jan '11 40 Call (OAC AH) and selling the Jan '10 80 call (EOG AP) for a $35.80 debit. The trade has a 74 day life and would provide 7.53% downside protection and an 11.73% assigned return rate for a 58.00% annualized return rate (for comparison purposes only). EOG Resources has a current annual dividend yield of 0.68%. [ATU-Seven Summits Research]