Aluminum Corporation of China (ACH) Showing Bullish Technicals But Could Break Through $23.38 Resistance

Aluminum Corp of China (NYSE: ACH) closed Wednesday's trading session at $22.93. In the past year, the stock has hit a 52-week low of $18.03 and 52-week high of $34.27. Aluminum Corporation of China stock has been showing support around $22.60 and resistance in the $23.38 range. Technical indicators for the stock are Bullish. For a hedged play on this stock, look at the May '11 $22.00 covered call for a net debit in the $20.23 area. That is also the break-even stock price for this trade. This covered call has a duration of 163 days, provides 11.77% downside protection and an assigned return rate of 8.75% for an annualized return rate of 19.59% (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 ACH Jan '12 $12.50 call and selling the May '11 $22.00 call for a total debit of $9.15. The trade has a lifespan of 163 days and would provide 5.58% downside protection and an assigned return rate of 3.83% for an annualized return rate of 9% (for comparison purposes only). Aluminum Corporation of China does not pay dividends at this time. [FBB-Seven Summits Research]

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