Newmont Mining (NEM) 11/6/09 PriceWatch Alert Bullish Price Movement

Posted: Friday, November 06, 2009 8:38 AM EDT

Newmont Mining (NYSE: NEM) closed yesterday at $47.25. So far the stock has hit a 52-week low of $21.17 and 52-week high of $49.84. Newmont Mining stock has been showing support around 46.34 and resistance in the 48.16 range. Technical indicators for the stock are Bullish and S&P gives NEM a positive 4 STAR (out of 5) buy rating. NEM appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at a Jan '10 47 covered call (NEM AG) for a net debit in the $43.60 area. That is also the break even stock price for this trade. This covered call has a 71 day duration, provides 7.72% downside protection and a 7.80% assigned return rate for a 40.09% 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 NEM Jan '11 25 Call (VIE AE) and selling the Jan '10 47 call (NEM AG) for a $19.45 debit. The trade has a 71 day life and would provide 5.93% downside protection and a 13.11% assigned return rate for a 67.00% annualized return rate (for comparison purposes only). Newmont Mining has a current annual dividend yield of 0.86%. [FBB-Seven Summits Research]

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