Cabot Oil and Gas (COG) Shows Support At $37.29 With S&P 4 Star Buy Rating

Posted: Wednesday, November 04, 2009 9:03 AM EDT
By: Market Intelligence Center Staff

Cabot Oil and Gas (NYSE: COG) closed yesterday at $39.64. So far the stock has hit a 52-week low of $17.84 and 52-week high of $42.80. Cabot Oil and Gas stock has been showing support around 37.29 and resistance in the 40.91 range. Technical indicators for the stock are Bullish and S&P gives COG a positive 4 STAR (out of 5) buy rating. COG appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Jan '10 35 covered call (COG AG) for a net debit in the $33.64 area. That is also the break even stock price for this trade. This covered call has a 73 day duration, provides 15.14% downside protection and a 4.04% assigned return rate for a 20.21% 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 COG Jan '11 20 Call (ZIL AD) and selling the Jan '10 35 call (COG AG) for a $14.60 debit. The trade has a 73 day life and would provide 12.71% downside protection and a 2.74% assigned return rate for a 14.00% annualized return rate (for comparison purposes only). Cabot Oil and Gas has a current annual dividend yield of 0.31%. [WBA-Seven Summits Research]