Murphy Oil (MUR) 11/20/09 PriceWatch Alert Technicals Showing Bearish

Posted: Friday, November 20, 2009 8:23 AM EDT
By: Market Intelligence Center Staff

Murphy Oil (NYSE: MUR) closed yesterday at $57.61. So far the stock has hit a 52-week low of $35.55 and 52-week high of $65.12. Murphy Oil stock has been showing support around 55.89 and resistance in the 60.11 range. Technical indicators for the stock are Bearish and S&P gives MUR a positive 4 STAR (out of 5) buy rating. MUR appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at a Jan '10 55 covered call (MUR AK) for a net debit in the $52.81 area. That is also the break even stock price for this trade. This covered call has a 57 day duration, provides 8.33% downside protection and a 4.15% assigned return rate for a 26.55% 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 MUR Jan '11 30 Call (OBY AF) and selling the Jan '10 55 call (MUR AK) for a $23.30 debit. The trade has a 57 day life and would provide 7.48% downside protection and a 7.30% assigned return rate for a 47.00% annualized return rate (for comparison purposes only). Murphy Oil has a current annual dividend yield of 1.65%. [FBB-Seven Summits Research]