Noble Energy (NBL) 11/18/09 PriceWatch Alert Up To 29.31% Return

Posted: Wednesday, November 18, 2009 8:47 AM EDT
By: Market Intelligence Center Staff

Noble Energy (NYSE: NBL) closed yesterday at $67.06. So far the stock has hit a 52-week low of $37.15 and 52-week high of $74.02. Noble Energy stock has been showing support around 66.00 and resistance in the 68.38 range. Technical indicators for the stock are Bearish and S&P gives NBL a positive 4 STAR (out of 5) buy rating. NBL appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Jan '10 65 covered call (NBL AM) for a net debit in the $62.06 area. That is also the break even stock price for this trade. This covered call has a 59 day duration, provides 7.46% downside protection and a 4.74% assigned return rate for a 29.31% 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 NBL Jan '11 22.50 Call (XLH AX) and selling the Jan '10 65 call (NBL AM) for a $39.90 debit. The trade has a 59 day life and would provide 6.95% downside protection and a 6.52% assigned return rate for a 40.00% annualized return rate (for comparison purposes only). Noble Energy has a current annual dividend yield of 1.09%. [WBA-Seven Summits Research]