Hess (HES) 11/3/09 PriceWatch Alert Up To 22.16% Return

Posted: Tuesday, November 03, 2009 8:21 AM EDT
By: Market Intelligence Center Staff

Hess (NYSE: HES) closed yesterday at $54.75. So far the stock has hit a 52-week low of $35.50 and 52-week high of $69.74. Hess stock has been showing support around 52.45 and resistance in the 57.65 range. Technical indicators for the stock are Bearish and S&P gives HES a positive 4 STAR (out of 5) buy rating. HES appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at a Jan '10 50 covered call (IGG AJ) for a net debit in the $47.85 area. That is also the break even stock price for this trade. This covered call has a 74 day duration, provides 12.60% downside protection and a 4.49% assigned return rate for a 22.16% 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 HES Jan '11 30 Call (VHS AF) and selling the Jan '10 50 call (IGG AJ) for a $19.05 debit. The trade has a 74 day life and would provide 10.41% downside protection and a 4.99% assigned return rate for a 25.00% annualized return rate (for comparison purposes only). Hess has a current annual dividend yield of 0.71%. [ATU-Seven Summits Research]