Randgold Resources (GOLD) 11/11/09 PriceWatch Alert At $72.80 Break Even

Posted: Wednesday, November 11, 2009 8:44 AM EDT
By: Market Intelligence Center Staff

Randgold Resources (NasdaqNM: GOLD) closed yesterday at $78.60. So far the stock has hit a 52-week low of $25.05 and 52-week high of $80.60. Randgold Resources stock has been showing support around 74.67 and resistance in the 80.69 range. Technical indicators for the stock are Bullish and S&P gives GOLD a weak 2 STAR (out of 5) sell rating. GOLD appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jan '10 80 covered call (GUD AP) for a net debit in the $72.80 area. That is also the break even stock price for this trade. This covered call has a 66 day duration, provides 7.38% downside protection and a 9.89% assigned return rate for a 54.70% 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 GOLD Jan '11 30 Call (VEJ AF) and selling the Jan '10 80 call (GUD AP) for a $43.55 debit. The trade has a 66 day life and would provide 6.42% downside protection and a 14.81% assigned return rate for an 82.00% annualized return rate (for comparison purposes only). Randgold Resources has a current annual dividend yield of 0.15%. [WBA-Seven Summits Research]