Agilent Technologies Inc. (A) 11/5/09 PriceWatch Alert Bearish Price Movement

Posted: Thursday, November 05, 2009 8:28 AM EDT

Agilent Technologies Inc. (NYSE: A) closed yesterday at $25.05. So far the stock has hit a 52-week low of $12.02 and 52-week high of $29.38. Agilent stock has been showing support around 24.63 and resistance in the 25.79 range. Technical indicators for the stock are Bearish and S&P gives A a positive 4 STAR (out of 5) buy rating. A appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a May '10 25 covered call (A EE) for a net debit in the $22.38 area. That is also the break even stock price for this trade. This covered call has a 198 day duration, provides 10.66% downside protection and an 11.71% assigned return rate for a 21.58% 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 A Jan '11 12.50 Call (OAE AV) and selling the May '10 25 call (A EE) for a $10.88 debit. The trade has a 198 day life and would provide 6.67% downside protection and a 14.89% assigned return rate for a 27.00% annualized return rate (for comparison purposes only). Agilent does not pay dividends at this time. [THA-Seven Summits Research]

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