Nucor (NUE) PriceWatch Alert for November 6, 2009

Posted: Friday, November 06, 2009 8:27 AM EDT

Nucor (NYSE: NUE) closed yesterday at $39.78. So far the stock has hit a 52-week low of $25.25 and 52-week high of $51.08. Nucor stock has been showing support around 38.73 and resistance in the 40.31 range. Technical indicators for the stock are Bearish and S&P gives NUE a neutral 3 STAR (out of 5) hold rating. NUE appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jan '10 39 covered call (NUE AG) for a net debit in the $36.68 area. That is also the break even stock price for this trade. This covered call has a 71 day duration, provides 7.79% downside protection and a 6.32% assigned return rate for a 32.52% 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 NUE Jan '11 22.50 Call (VUB AX) and selling the Jan '10 39 call (NUE AG) for a $14.60 debit. The trade has a 71 day life and would provide 6.74% downside protection and a 13.01% assigned return rate for a 67.00% annualized return rate (for comparison purposes only). Nucor has a current annual dividend yield of 3.59%. [FBB-Seven Summits Research]

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