Potential Aluminum Corporation of China Trade Targets 24.55% Return

Aluminum Corporation of China （NYSE:ACH） closed Tuesday's favorable trading session at $25.06. In the past year, the stock has hit a 52-week low of $18.03 and 52-week high of $28.88. Aluminum Corporation of China stock has been showing support around $24.57 and resistance in the $25.35 range. Technical indicators for the stock are Bullish. For a hedged play on this stock, look at the May '11 $25.00 covered call for a net debit in the $23.41 area.

That is also the break-even stock price for this trade. This covered call has a duration of 101 days, provides 6.58% downside protection and an assigned return rate of 6.79% for an annualized return rate of 24.55% （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 $15.00 call and selling the May '11 $25.00 call for a total debit of $8.35. The trade has a lifespan of 101 days and would provide 6.82% downside protection and an assigned return rate of 19.76% for an annualized return rate of 71% （for comparison purposes only）. Aluminum Corporation of China does not pay dividends at this time.