Agilent Technologies Inc. (A) 11/12/09 PriceWatch Alert Up To 8.63% Downside Protection

Posted: Thursday, November 12, 2009 8:12 AM EDT
By: Market Intelligence Center Staff

Agilent Technologies Inc. (NYSE: A) closed yesterday at $27.46. So far the stock has hit a 52-week low of $12.02 and 52-week high of $29.38. Agilent stock has been showing support around 26.87 and resistance in the 27.75 range. Technical indicators for the stock are Bullish and S&P gives A a positive 4 STAR (out of 5) buy rating. A appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jan '10 26 covered call (A AU) for a net debit in the $25.09 area. That is also the break even stock price for this trade. This covered call has a 65 day duration, provides 8.63% downside protection and a 3.63% assigned return rate for a 20.37% 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 A Jan '11 10 Call (OAE AB) and selling the Jan '10 26 call (A AU) for a $15.33 debit. The trade has a 65 day life and would provide 7.76% downside protection and a 4.37% assigned return rate for a 25.00% annualized return rate (for comparison purposes only). Agilent does not pay dividends at this time. [THA-Seven Summits Research]