Massey Energy (MEE) 11/4/09 PriceWatch Alert Support Down To $27.60

Posted: Wednesday, November 04, 2009 8:18 AM EDT
By: Market Intelligence Center Staff

Massey Energy (NYSE: MEE) closed yesterday at $30.47. So far the stock has hit a 52-week low of $9.62 and 52-week high of $34.63. Massey Energy stock has been showing support around 27.60 and resistance in the 32.46 range. Technical indicators for the stock are Bullish and S&P gives MEE a neutral 3 STAR (out of 5) hold rating. MEE appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at an Apr '10 28 covered call (MEE DG) for a net debit in the $24.67 area. That is also the break even stock price for this trade. This covered call has a 164 day duration, provides 19.04% downside protection and a 13.50% assigned return rate for a 30.04% 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 MEE Jan '11 7.50 Call (VHK AU) and selling the Apr '10 28 call (MEE DG) for a $17.65 debit. The trade has a 164 day life and would provide 17.46% downside protection and a 16.15% assigned return rate for a 36.00% annualized return rate (for comparison purposes only). Massey Energy has a current annual dividend yield of 0.83%. [WBA-Seven Summits Research]