Agrium (AGU) Showing Bullish Technicals And Trading Just Under Its 52 Week High

Posted: Tuesday, September 07, 2010 8:26 AM EDT
By: Market Intelligence Center Staff

Agrium (NYSE: AGU) ended the last trading session at $72.54. So far the stock has hit a 52-week low of $45.98 and 52-week high of $73.85. Agrium stock has been showing support around 71.39 and resistance in the 74.07 range. Technical indicators for the stock are Bullish. AGU appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jan '11 72.50 covered call for a net debit in the $65.84 area. That is also the break even stock price for this trade. This covered call has a 137 day duration, provides 9.24% downside protection and a 10.12% assigned return rate for a 26.95% 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 AGU Jan '12 30 Call and selling the Jan '11 72.50 call for a $37.95 debit. The trade has a 137 day life and would provide 6.33% downside protection and an 11.99% assigned return rate for a 32.00% annualized return rate (for comparison purposes only). Agrium has a current annual dividend yield of 0.16%. [ATU-Seven Summits Research]