Aluminum Corporation of China trade has 8pct downside protection

Worldal reported that Aluminum Corporation of China closed Tuesday's trading session at USD 23.42. In the past year, the stock has hit a 52 week low of USD 18.03 and 52 week high of USD 26.89.

Aluminum Corporation of China stock has been showing support around USD 23.14 and resistance in the USD 23.56 range. Technical indicators for the stock are. For a hedged play on this stock look at the August 2011 USD 23.00 covered call for a net debit in the USD 21.62 area. That is also the break even stock price for this trade. This covered call has duration of 122 days, provides 7.69% downside protection and an assigned return rate of 6.38% for an annualized return rate of 19.10%.

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 January 2012 USD 17.50 call and selling the August 2011 USD 23.00 call for a total debit of USD 4.75. The trade has a lifespan of 122 days and would provide 5.00% downside protection and an assigned return rate of 15.79% for an annualized return rate of 47.24%. Aluminum Corporation of China does not pay dividends at this time.