Agilent Technologies Inc. (A) 11/17/09 PriceWatch Alert With 18.73% Downside Protection

Posted: Tuesday, November 17, 2009 8:19 AM EDT
By: Market Intelligence Center Staff

Agilent Technologies Inc. (NYSE: A) closed yesterday at $29.37. So far the stock has hit a 52-week low of $12.02 and 52-week high of $29.50. Agilent stock has been showing support around 27.59 and resistance in the 30.39 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 May '10 25 covered call (A EE) for a net debit in the $23.87 area. That is also the break even stock price for this trade. This covered call has an 186 day duration, provides 18.73% downside protection and a 4.73% assigned return rate for a 9.29% 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 12.50 Call (OAE AV) and selling the May '10 25 call (A EE) for an $11.45 debit. The trade has an 186 day life and would provide 18.45% downside protection and a 9.17% assigned return rate for an 18.00% annualized return rate (for comparison purposes only). Agilent does not pay dividends at this time. [ATU-Seven Summits Research]