TRW Automotive Holdings Corp (NYSE: TRW) closed Thursdays trading session at $56.28. In the past year, the stock has hit a 52-week low of $26.20 and 52-week high of $63.26. TRW Automotive (TRW) stock has been showing support around $52.17 and resistance in the $58.47 range. Technical indicators for the stock are Bullish and Samp;P gives TRW Automotive (TRW) a very positive 5 STARS (out of 5) strong buy rating. For a hedged play on TRW Automotive (TRW), look at the Oct 11 $55.00 covered call for a net debit in the $51.28 area. That is also the break-even stock price for this trade. This covered call has a duration of 120 days, provides 8.88% downside protection and an assigned return rate of 7.25% for an annualized return rate of 22.07% (for comparison purposes only). A lower-cost hedged play for TRW Automotive (TRW) would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the TRW Automotive (TRW) Jan 12 $35.00 call and selling the Oct 11 $55.00 call for a total debit of $16.65. The trade has a lifespan of 120 days and would provide 8.23% downside protection and an assigned return rate of 20.12% for an annualized return rate of 61% (for comparison purposes only). TRW Automotive (TRW) does not pay dividends at this time. [FBB-Seven Summits Research]
Source: http://www.bulletinslive.com/?p=1056
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