Petrochina (PTR) 11/11/09 PriceWatch Alert With 6.73% Downside Protection

Posted: Wednesday, November 11, 2009 8:46 AM EDT
By: Market Intelligence Center Staff

Petrochina (NYSE: PTR) closed yesterday at $132.30. So far the stock has hit a 52-week low of $63.62 and 52-week high of $135.92. Petrochina stock has been showing support around 129.65 and resistance in the 134.17 range. Technical indicators for the stock are Bullish and S&P gives PTR a positive 4 STAR (out of 5) buy rating. PTR appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Jan '10 130 covered call (PTR AF) for a net debit in the $123.40 area. That is also the break even stock price for this trade. This covered call has a 66 day duration, provides 6.73% downside protection and a 5.35% assigned return rate for a 29.58% 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 PTR Jan '11 70 Call (ZJK AN) and selling the Jan '10 130 call (PTR AF) for a $54.00 debit. The trade has a 66 day life and would provide 6.27% downside protection and an 11.11% assigned return rate for a 61.00% annualized return rate (for comparison purposes only). Petrochina has a current annual dividend yield of 2.68%. [WBA-Seven Summits Research]