National Oilwell Varco (NOV) PriceWatch Alert for November 6, 2009

Posted: Friday, November 06, 2009 8:38 AM EDT
By: Market Intelligence Center Staff

National Oilwell Varco (NYSE: NOV) closed yesterday at $43.54. So far the stock has hit a 52-week low of $17.60 and 52-week high of $50.17. National Oilwell Varco stock has been showing support around 42.08 and resistance in the 44.32 range. Technical indicators for the stock are Bullish and S&P gives NOV a positive 4 STAR (out of 5) buy rating. NOV appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Feb '10 44 covered call (NON BR) for a net debit in the $39.44 area. That is also the break even stock price for this trade. This covered call has a 106 day duration, provides 9.42% downside protection and an 11.56% assigned return rate for a 39.81% 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 NOV Jan '11 17.50 Call (OKP AW) and selling the Feb '10 44 call (NON BR) for a $22.60 debit. The trade has a 106 day life and would provide 7.90% downside protection and a 17.26% assigned return rate for a 59.00% annualized return rate (for comparison purposes only). National Oilwell Varco does not pay dividends at this time. [FBB-Seven Summits Research]