BJ Services (BJS) 11/20/09 PriceWatch Alert Down To $16.79 Break Even

Posted: Friday, November 20, 2009 8:32 AM EDT
By: Market Intelligence Center Staff

BJ Services (NYSE: BJS) closed yesterday at $18.94. So far the stock has hit a 52-week low of $8.34 and 52-week high of $21.59. BJ Services stock has been showing support around 18.63 and resistance in the 19.45 range. Technical indicators for the stock are Bearish and S&P gives BJS a neutral 3 STAR (out of 5) hold rating. BJS appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at an Apr '10 18 covered call (BJS DJ) for a net debit in the $16.79 area. That is also the break even stock price for this trade. This covered call has a 148 day duration, provides 11.35% downside protection and a 7.21% assigned return rate for a 17.77% 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 BJS Jan '11 12.50 Call (VDL AV) and selling the Apr '10 18 call (BJS DJ) for a $5.05 debit. The trade has a 148 day life and would provide 7.34% downside protection and an 8.91% assigned return rate for a 22.00% annualized return rate (for comparison purposes only). BJ Services has a current annual dividend yield of 1.01%. [FBB-Seven Summits Research]