Canadian Natural Resources (CNQ) 11/6/09 PriceWatch Alert Bearish Price Movement

Posted: Friday, November 06, 2009 8:41 AM EDT
By: Market Intelligence Center Staff

Canadian Natural Resources (NYSE: CNQ) closed yesterday at $63.36. So far the stock has hit a 52-week low of $26.43 and 52-week high of $76.51. Canadian Natural Resources stock has been showing support around 61.23 and resistance in the 65.71 range. Technical indicators for the stock are Bearish and S&P gives CNQ a neutral 3 STAR (out of 5) hold rating. CNQ appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jan '10 60 covered call (CNQ AL) for a net debit in the $56.46 area. That is also the break even stock price for this trade. This covered call has a 71 day duration, provides 10.89% downside protection and a 6.27% assigned return rate for a 32.23% 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 CNQ Jan '11 25 Call (OKR AE) and selling the Jan '10 60 call (CNQ AL) for a $32.15 debit. The trade has a 71 day life and would provide 9.80% downside protection and an 8.86% assigned return rate for a 46.00% annualized return rate (for comparison purposes only). Canadian Natural Resources has a current annual dividend yield of 0.60%. [FBB-Seven Summits Research]