Century Aluminum （NASDAQ: CENX） closed Friday's trading session at $15.72. In the past year, the stock has hit a 52-week low of $8.25 and 52-week high of $17.14. Century Aluminum stock has been showing support around $15.35 and resistance in the $16.41 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 $12.80 area. That is also the break-even stock price for this trade. This covered call has a duration of 151 days, provides 18.58% downside protection and an assigned return rate of 9.37% for an annualized return rate of 22.66% （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 $5.88. The trade has a lifespan of 151 days and would provide 14.89% downside protection and an assigned return rate of 10.54% for an annualized return rate of 25% （for comparison purposes only）. Century Aluminum does not pay dividends at this time. [ABR-Seven Summits Research]
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