Alpha Natural Resources (ANR) PriceWatch Alert for November 20, 2009

Posted: Friday, November 20, 2009 8:16 AM EDT
By: Market Intelligence Center Staff

Alpha Natural Resources (NYSE: ANR) closed yesterday at $40.32. So far the stock has hit a 52-week low of $13.93 and 52-week high of $42.20. Alpha Natural Resources stock has been showing support around 38.75 and resistance in the 42.21 range. Technical indicators for the stock are Bullish and S&P gives ANR a neutral 3 STAR (out of 5) hold rating. ANR appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at a Mar '10 40 covered call (ANR CH) for a net debit in the $35.32 area. That is also the break even stock price for this trade. This covered call has a 120 day duration, provides 12.40% downside protection and a 13.25% assigned return rate for a 40.30% 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 ANR Jan '11 17.50 Call (VJV AW) and selling the Mar '10 40 call (ANR CH) for a $19.00 debit. The trade has a 120 day life and would provide 9.47% downside protection and an 18.42% assigned return rate for a 56.00% annualized return rate (for comparison purposes only). Alpha Natural Resources does not pay dividends at this time. [FBB-Seven Summits Research]