Nalco (NLC) Could Fall Through $27.98 Support Level

Nalco (NYSE:NLC) closed Friday's unfavorable trading session at $28.47. In the past year, the stock has hit a 52-week low of $20.15 and 52-week high of $32.62. Nalco stock has been showing support around $27.98 and resistance in the $29.10 range. Technical indicators for the stock are Bullish and S&P gives NLC a neutral 3 STARS (out of 5) hold rating. For a hedged play on this stock, look at the Sep '11 $28.00 covered call for a net debit in the $26.72 area. That is also the break-even stock price for this trade. This covered call has a duration of 117 days, provides 6.15% downside protection and an assigned return rate of 4.79% for an annualized return rate of 14.94% (for comparison purposes only). Nalco has a current annual dividend yield of 0.48%.