Carnival (CCL) PriceWatch Alert for November 6, 2009

Posted: Friday, November 06, 2009 8:41 AM EDT

Carnival (NYSE: CCL) closed yesterday at $30.82. So far the stock has hit a 52-week low of $14.85 and 52-week high of $34.95. Carnival stock has been showing support around 29.91 and resistance in the 31.27 range. Technical indicators for the stock are Bearish and S&P gives CCL a neutral 3 STAR (out of 5) hold rating. CCL appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Jan '10 29 covered call (CCL AP) for a net debit in the $27.62 area. That is also the break even stock price for this trade. This covered call has a 71 day duration, provides 10.38% downside protection and a 5.00% assigned return rate for a 25.69% 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 CCL Jan '11 10 Call (VKR AB) and selling the Jan '10 29 call (CCL AP) for a $17.65 debit. The trade has a 71 day life and would provide 10.29% downside protection and a 7.65% assigned return rate for a 39.00% annualized return rate (for comparison purposes only). Carnival does not pay dividends at this time. [FBB-Seven Summits Research]

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