Potential Aluminum Corporation of China (ACH) Trade Targets 15.18% Return

Aluminum Corporation of China (NYSE:ACH) closed Monday's favorable trading session at $20.82. 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 (ACH) stock has been showing support around $20.51 and resistance in the $21.01 range. Technical indicators for the stock are Bearish. For a hedged play on Aluminum Corporation of China (ACH), look at the Nov '11 $20.00 covered call for a net debit in the $18.87 area. That is also the break-even stock price for this trade. This covered call has a duration of 144 days, provides 9.37% downside protection and an assigned return rate of 5.99% for an annualized return rate of 15.18% (for comparison purposes only). A lower-cost hedged play for Aluminum Corporation of China (ACH) would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the Aluminum Corporation of China (ACH) Jan '12 $17.50 call and selling the Nov '11 $20.00 call for a total debit of $2.10. The trade has a lifespan of 144 days and would provide 5.86% downside protection and an assigned return rate of 19.05% for an annualized return rate of 48% (for comparison purposes only). Aluminum Corporation of China (ACH) has a current annual dividend yield of 0.17%.