AstraZeneca (AZN) 11/4/09 PriceWatch Alert With Support Around $43.73

Posted: Wednesday, November 04, 2009 8:07 AM EDT

AstraZeneca (NYSE: AZN) closed yesterday at $44.34. So far the stock has hit a 52-week low of $29.96 and 52-week high of $47.61. AstraZeneca stock has been showing support around 43.73 and resistance in the 44.67 range. Technical indicators for the stock are Bearish and S&P gives AZN a neutral 3 STAR (out of 5) hold rating. AZN appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at an Apr '10 40 covered call (AZN DH) for a net debit in the $39.14 area. That is also the break even stock price for this trade. This covered call has a 164 day duration, provides 11.73% downside protection and a 2.20% assigned return rate for a 4.89% 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 AZN Jan '11 30 Call (OXU AF) and selling the Apr '10 40 call (AZN DH) for a $9.45 debit. The trade has a 164 day life and would provide 11.03% downside protection and a 5.82% assigned return rate for a 13.00% annualized return rate (for comparison purposes only). AstraZeneca has a current annual dividend yield of 4.65%. [WBA-Seven Summits Research]

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