Martin Marietta Materials (MLM) 11/20/09 PriceWatch Alert Up To 5.93% Downside Protection

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

Martin Marietta Materials (NYSE: MLM) closed yesterday at $85.98. So far the stock has hit a 52-week low of $58.62 and 52-week high of $108.49. Martin Marietta Materials stock has been showing support around 83.73 and resistance in the 88.53 range. Technical indicators for the stock are Bearish and S&P gives MLM a neutral 3 STAR (out of 5) hold rating. MLM appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Jan '10 85 covered call (MLM AQ) for a net debit in the $80.88 area. That is also the break even stock price for this trade. This covered call has a 57 day duration, provides 5.93% downside protection and a 5.09% assigned return rate for a 32.62% 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 MLM Jan '11 50 Call (ZOI AJ) and selling the Jan '10 85 call (MLM AQ) for a $32.10 debit. The trade has a 57 day life and would provide 4.51% downside protection and a 9.03% assigned return rate for a 58.00% annualized return rate (for comparison purposes only). Martin Marietta Materials has a current annual dividend yield of 1.80%. [FBB-Seven Summits Research]