BHP Billiton Ltd （NYSE: BHP） closed Wednesday's trading session at $87.80. In the past year, the stock has hit a 52-week low of $58.38 and 52-week high of $92.62. BHP Billiton stock has been showing support around $85.68 and resistance in the $90.18 range.
Technical indicators for the stock are Bullish. For a hedged play on this stock, look at the Feb '11 $85.00 covered call for a net debit in the $81.30 area. That is also the break-even stock price for this trade. This covered call has a duration of 72 days, provides 7.40% downside protection and an assigned return rate of 4.55% for an annualized return rate of 23.07% （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 BHP Jan '12 $50.00 call and selling the Feb '11 $85.00 call for a total debit of $32.00. The trade has a lifespan of 72 days and would provide 6.61% downside protection and an assigned return rate of 9.38% for an annualized return rate of 48% （for comparison purposes only）. BHP Billiton has a current annual dividend yield of 1.96%.
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