Allegheny Technologies (ATI) 11/20/09 PriceWatch Alert Support At Around $32.25

Posted: Friday, November 20, 2009 8:37 AM EDT
By: Market Intelligence Center Staff

Allegheny Technologies (NYSE: ATI) closed yesterday at $33.84. So far the stock has hit a 52-week low of $15.00 and 52-week high of $44.09. Allegheny Technologies stock has been showing support around 32.25 and resistance in the 34.99 range. Technical indicators for the stock are Bullish and S&P gives ATI a neutral 3 STAR (out of 5) hold rating. ATI appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at an Apr '10 33 covered call (AAS DP) for a net debit in the $29.04 area. That is also the break even stock price for this trade. This covered call has a 148 day duration, provides 14.18% downside protection and a 13.64% assigned return rate for a 33.63% 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 ATI Jan '11 17.50 Call (OYG AW) and selling the Apr '10 33 call (AAS DP) for a $12.40 debit. The trade has a 148 day life and would provide 11.64% downside protection and a 25.00% assigned return rate for a 62.00% annualized return rate (for comparison purposes only). Allegheny Technologies has a current annual dividend yield of 2.06%. [FBB-Seven Summits Research]