Aluminum Corporation of China (ACH) Showing Bearish Technicals With Support At $20.86

Aluminum Corporation of China (NYSE:ACH) closed Wednesday's dramatic trading session at $21.29. In the past year, the stock has hit a 52-week low of $18.18 and 52-week high of $26.80. Aluminum Corporation of China stock has been showing support around $20.86 and resistance in the $21.54 range. Technical indicators for the stock are Bearish. For a hedged play on this stock, look at the Nov '11 $21.00 covered call for a net debit in the $19.39 area. That is also the break-even stock price for this trade. This covered call has a duration of 177 days, provides 8.92% downside protection and an assigned return rate of 8.30% for an annualized return rate of 17.12% (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 $17.50 call and selling the Nov '11 $21.00 call for a total debit of $2.70. The trade has a lifespan of 177 days and would provide 5.12% downside protection and an assigned return rate of 29.63% for an annualized return rate of 61% (for comparison purposes only). Aluminum Corporation of China has a current annual dividend yield of 0.16%.