Rio Tinto PLC (RTP) 11/6/09 PriceWatch Alert Shows Bullish Technicals

Posted: Friday, November 06, 2009 8:14 AM EDT

Rio Tinto PLC (NYSE: RTP) closed yesterday at $190.57. So far the stock has hit a 52-week low of $59.20 and 52-week high of $216.46. Rio Tinto PLC stock has been showing support around 186.58 and resistance in the 194.96 range. Technical indicators for the stock are Bullish and S&P gives RTP a neutral 3 STAR (out of 5) hold rating. RTP appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at a Jan '10 190 covered call (RTP AV) for a net debit in the $174.17 area. That is also the break even stock price for this trade. This covered call has a 71 day duration, provides 8.61% downside protection and a 9.09% assigned return rate for a 46.72% 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 RTP Jan '11 140 Call (ZLR AH) and selling the Jan '10 190 call (RTP AV) for a $47.60 debit. The trade has a 71 day life and would provide 1.56% downside protection and a 5.04% assigned return rate for a 26.00% annualized return rate (for comparison purposes only). Rio Tinto PLC has a current annual dividend yield of 1.46%. [FBB-Seven Summits Research]

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