China Mobile (CHL) Showing Bearish Technicals With Resistance At $50.43

China Mobile Ltd (NYSE: CHL) closed Thursday’s trading session at $50.05. In the past year, the stock has hit a 52-week low of $44.36 and 52-week high of $54.70. China Mobile stock has been showing support around $49.81 and resistance in the $50.43 range. Technical indicators for the stock are Bearish and S&P gives CHL a neutral 3 STARS (out of 5) hold rating. For a hedged play on this stock, look at the Mar ’11 $50.00 covered call for a net debit in the $47.90 area. That is also the break-even stock price for this trade. This covered call has a duration of 99 days, provides 4.30% downside protection and an assigned return rate of 4.38% for an annualized return rate of 16.16% (for 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 CHL Jan ’12 $40.00 call and selling the Mar ’11 $50.00 call for a total debit of $8.85. The trade has a lifespan of 99 days and would provide 2.40% downside protection and an assigned return rate of 12.99% for an annualized return rate of 48% (for comparison purposes only). China Mobile has a current annual dividend yield of 3.28%. [ATU-Seven Summits Research]
Article via Market Intelligence Center