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20

Exxon Mobil PriceWatch Alert Up To 3.17% Downside Protection

US oil giant Exxon Mobil's shares closed yesterday at $82.86

US oil giant Exxon Mobil's shares closed yesterday at $82.8, hitting a 52-week low of $77.55 and 52-week high of $96.12.

Exxon Mobil stock has been showing support around 80.89 and resistance in the 84.21 range.

The company appears on the Investors Observer Analysts Favorites list.

For a hedged play on this stock, look at a Sep '08 85 covered call (XOM IQ) for a net debit in the $80.23 area. That is also the break even stock price for this trade. This covered call has a 59 day duration, provides 3.17% downside protection and a 5.95% assigned return rate for a 36.78% 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 XOM Jan '09 70 Call (XOM AN) and selling the Sep '08 85 call (XOM IQ) for a $12.17 debit. The trade has a 59 day life and would provide 0.83% downside protection and a 23.25% assigned return rate for a 144.00% annualized return rate (for comparison purposes only). Exxon Mobil does not pay dividends at this time.