Massey Energy (MEE) PriceWatch Alert for November 18, 2009

Posted: Wednesday, November 18, 2009 8:34 AM EDT
By: Market Intelligence Center Staff

Massey Energy (NYSE: MEE) closed yesterday at $40.39. So far the stock has hit a 52-week low of $9.62 and 52-week high of $40.41. Massey Energy stock has been showing support around 36.91 and resistance in the 42.15 range. Technical indicators for the stock are Bullish and S&P gives MEE a neutral 3 STAR (out of 5) hold rating. MEE appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Jan '10 38 covered call (MQO AC) for a net debit in the $35.69 area. That is also the break even stock price for this trade. This covered call has a 59 day duration, provides 11.64% downside protection and a 6.47% assigned return rate for a 40.04% 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 MEE Jan '11 7.50 Call (VHK AU) and selling the Jan '10 38 call (MQO AC) for a $28.30 debit. The trade has a 59 day life and would provide 11.36% downside protection and a 7.77% assigned return rate for a 48.00% annualized return rate (for comparison purposes only). Massey Energy has a current annual dividend yield of 0.67%. [WBA-Seven Summits Research]