Suncor Energy (SU) 11/6/09 PriceWatch Alert At $29.54 Break Even

Posted: Friday, November 06, 2009 8:21 AM EDT
By: Market Intelligence Center Staff

Suncor Energy (NYSE: SU) closed yesterday at $33.14. So far the stock has hit a 52-week low of $14.52 and 52-week high of $39.62. Suncor Energy stock has been showing support around 32.25 and resistance in the 33.81 range. Technical indicators for the stock are Bearish and S&P gives SU a neutral 3 STAR (out of 5) hold rating. SU appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at a Mar '10 33 covered call (SXH CR) for a net debit in the $29.54 area. That is also the break even stock price for this trade. This covered call has a 134 day duration, provides 10.86% downside protection and an 11.71% assigned return rate for a 31.90% 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 SU Jan '11 15 Call (OYX AC) and selling the Mar '10 33 call (SXH CR) for a $15.10 debit. The trade has a 134 day life and would provide 9.17% downside protection and a 19.21% assigned return rate for a 52.00% annualized return rate (for comparison purposes only). Suncor Energy has a current annual dividend yield of 1.12%. [FBB-Seven Summits Research]