Massey Energy (MEE) 11/19/09 PriceWatch Alert Technicals Showing Bullish

Posted: Thursday, November 19, 2009 8:27 AM EDT
By: Market Intelligence Center Staff

Massey Energy (NYSE: MEE) closed yesterday at $39.53. So far the stock has hit a 52-week low of $9.62 and 52-week high of $41.14. Massey Energy stock has been showing support around 37.32 and resistance in the 42.24 range. Technical indicators for the stock are Bullish and S&P gives MEE a weak 2 STAR (out of 5) sell rating. MEE appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Jan '10 37 covered call (MQO AB) for a net debit in the $34.83 area. That is also the break even stock price for this trade. This covered call has a 58 day duration, provides 11.89% downside protection and a 6.23% assigned return rate for a 39.21% 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 10 Call (VHK AB) and selling the Jan '10 37 call (MQO AB) for a $25.00 debit. The trade has a 58 day life and would provide 11.46% downside protection and an 8.00% assigned return rate for a 50.00% annualized return rate (for comparison purposes only). Massey Energy has a current annual dividend yield of 0.63%. [THA-Seven Summits Research]