Molson Coors Brewing (TAP) Has Bullish Technicals And Appears On Investors Observer Analysts Favorites List

Posted: Wednesday, November 04, 2009 8:51 AM EDT

Molson Coors Brewing (NYSE: TAP) closed yesterday at $49.40. So far the stock has hit a 52-week low of $30.76 and 52-week high of $51.33. Molson Coors Brewing stock has been showing support around 47.99 and resistance in the 50.35 range. Technical indicators for the stock are Bullish and S&P gives TAP a positive 4 STAR (out of 5) buy rating. TAP appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Jan '10 50 covered call (TAP AJ) for a net debit in the $47.40 area. That is also the break even stock price for this trade. This covered call has a 73 day duration, provides 4.05% downside protection and a 5.49% assigned return rate for a 27.43% 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 TAP Jan '11 35 Call (OIF AG) and selling the Jan '10 50 call (TAP AJ) for a $13.15 debit. The trade has a 73 day life and would provide 2.53% downside protection and a 14.07% assigned return rate for a 70.00% annualized return rate (for comparison purposes only). Molson Coors Brewing has a current annual dividend yield of 1.96%. [WBA-Seven Summits Research]

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