Arcelor Mittal (MT) 11/20/09 PriceWatch Alert With Support Around $37.24

Posted: Friday, November 20, 2009 8:42 AM EDT
By: Market Intelligence Center Staff

Arcelor Mittal (NYSE: MT) closed yesterday at $38.00. So far the stock has hit a 52-week low of $15.44 and 52-week high of $42.32. Arcelor Mittal stock has been showing support around 37.24 and resistance in the 38.52 range. Technical indicators for the stock are Bullish. MT appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Mar '10 39 covered call (MT CM) for a net debit in the $34.70 area. That is also the break even stock price for this trade. This covered call has a 120 day duration, provides 8.68% downside protection and a 12.39% assigned return rate for a 37.69% 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 MT Jan '11 17.50 Call (ZMU AW) and selling the Mar '10 39 call (MT CM) for an $18.25 debit. The trade has a 120 day life and would provide 5.92% downside protection and a 17.81% assigned return rate for a 54.00% annualized return rate (for comparison purposes only). Arcelor Mittal has a current annual dividend yield of 2.46%. [FBB-Seven Summits Research]