Aluminum Corporation of China (ACH) PriceWatch Alert With Support Around $27.87

Aluminum Corporation of China (NYSE: ACH) closed yesterday at $28.82. So far the stock has hit a 52-week low of $7.22 and 52-week high of $32.79. Aluminum Corporation of China stock has been showing support around 27.87 and resistance in the 29.39 range. Technical indicators for the stock are Bullish and S&P gives ACH a neutral 3 STAR (out of 5) hold rating. ACH appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Nov '09 25 covered call (ACH KE) for a net debit in the $23.32 area. That is also the break even stock price for this trade.

This covered call has a 94 day duration, provides 19.08% downside protection and a 7.20% assigned return rate for a 27.97% 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 ACH Jan '11 7.50 Call (ZFY AU) and selling the Nov '09 25 call (ACH KE) for a $15.85 debit. The trade has a 94 day life and would provide 18.98% downside protection and a 10.41% assigned return rate for a 40.00% annualized return rate (for comparison purposes only). Aluminum Corporation of China has a current annual dividend yield of 0.50%.

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