China LIfe Insurance (LFC) 11/6/09 PriceWatch Alert Bullish Price Movement

Posted: Friday, November 06, 2009 8:31 AM EDT
By: Market Intelligence Center Staff

China LIfe Insurance (NYSE: LFC) closed yesterday at $72.56. So far the stock has hit a 52-week low of $33.93 and 52-week high of $74.29. China LIfe Insurance stock has been showing support around 71.27 and resistance in the 73.25 range. Technical indicators for the stock are Bullish and S&P gives LFC a positive 4 STAR (out of 5) buy rating. LFC appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jan '10 70 covered call (LFC AN) for a net debit in the $66.66 area. That is also the break even stock price for this trade. This covered call has a 71 day duration, provides 8.13% downside protection and a 5.01% assigned return rate for a 25.76% 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 LFC Jan '11 30 Call (OOE AF) and selling the Jan '10 70 call (LFC AN) for a $36.80 debit. The trade has a 71 day life and would provide 7.94% downside protection and an 8.70% assigned return rate for a 45.00% annualized return rate (for comparison purposes only). China LIfe Insurance has a current annual dividend yield of 0.62%. [FBB-Seven Summits Research]