Potential Century Aluminum (CENX) Trade Has $13.01 Breakeven

Century Aluminum （NASDAQ: CENX） closed Monday's trading session at $16.36. In the past year, the stock has hit a 52-week low of $8.25 and 52-week high of $18.77. Century Aluminum stock has been showing support around $15.51 and resistance in the $17.01 range. Technical indicators for the stock are Bullish. For a hedged play on this stock, look at the Jun '11 $14.00 covered call for a net debit in the $13.01 area.

That is also the break-even stock price for this trade. This covered call has a duration of 165 days, provides 20.48% downside protection and an assigned return rate of 7.61% for an annualized return rate of 16.83% （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 CENX Jan '12 $7.50 call and selling the Jun '11 $14.00 call for a total debit of $6.10. The trade has a lifespan of 165 days and would provide 16.87% downside protection and an assigned return rate of 6.56% for an annualized return rate of 15% （for comparison purposes only）. Century Aluminum does not pay dividends at this time. [THA-Seven Summits Research]