Potential Century Aluminum Trade Has $11.38 Breakeven

Century Aluminum （NASDAQ:CENX） closed Tuesday's choppy trading session at $14.24. 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 $13.59 and resistance in the $14.85 range. Technical indicators for the stock are Bearish. For a hedged play on this stock, look at the Sep '11 $13.00 covered call for a net debit in the $11.38 area.

That is also the break-even stock price for this trade. This covered call has a duration of 234 days, provides 20.08% downside protection and an assigned return rate of 14.24% for an annualized return rate of 22.20% （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 Sep '11 $13.00 call for a total debit of $4.39.

The trade has a lifespan of 234 days and would provide 16.50% downside protection and an assigned return rate of 25.28% for an annualized return rate of 39% （for comparison purposes only）。 Century Aluminum does not pay dividends at this time.