Teva Pharmaceutical (TEVA) PriceWatch Alert Could Hit 31.05% Return

Teva Pharmaceutical (NasdaqNM: TEVA) closed yesterday at $44.53. So far the stock has hit a 52-week low of $35.89 and 52-week high of $48.74. Teva Pharmaceutical stock has been showing support around 43.74 and resistance in the 45.64 range. Technical indicators for the stock are Neutral and S&P gives TEVA a very positive 5 STAR (out of 5) strong buy rating. TEVA appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Jun '09 45 covered call (TVQ FI) for a net debit in the $42.78 area. That is also the break even stock price for this trade. This covered call has a 61 day duration, provides 3.93% downside protection and a 5.19% assigned return rate for a 31.05% annualized return rate (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 TEVA Jan '10 30 Call (WTX AF) and selling the Jun '09 45 call (TVQ FI) for a $13.45 debit. The trade has a 61 day life and would provide 2.43% downside protection and an 11.52% assigned return rate for a 69.00% annualized return rate (for comparison purposes only). Teva Pharmaceutical has a current annual dividend yield of 1.21%.