Tesoro (TSO) 11/6/09 PriceWatch Alert Technicals Showing Bearish

Posted: Friday, November 06, 2009 8:44 AM EDT
By: Market Intelligence Center Staff

Tesoro (NYSE: TSO) closed yesterday at $14.71. So far the stock has hit a 52-week low of $6.71 and 52-week high of $19.16. Tesoro stock has been showing support around 14.16 and resistance in the 15.06 range. Technical indicators for the stock are Bearish and S&P gives TSO a neutral 3 STAR (out of 5) hold rating. TSO appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a May '10 13 covered call (TSO EM) for a net debit in the $11.76 area. That is also the break even stock price for this trade. This covered call has a 197 day duration, provides 20.05% downside protection and a 10.54% assigned return rate for a 19.54% 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 TSO Jan '11 7.50 Call (ZGC AU) and selling the May '10 13 call (TSO EM) for a $4.60 debit. The trade has a 197 day life and would provide 17.74% downside protection and a 19.57% assigned return rate for a 36.00% annualized return rate (for comparison purposes only). Tesoro has a current annual dividend yield of 2.78%. [FBB-Seven Summits Research]