Teva Pharmaceutical (TEVA) Showing Bearish Technicals But Could Fall Through $49.88 Support

Teva Pharmaceutical (NASDAQ:TEVA) closed Friday's positive trading session at $50.46. In the past year, the stock has hit a 52-week low of $46.99 and 52-week high of $64.95. Teva Pharmaceutical stock has been showing support around $49.88 and resistance in the $50.92 range. Technical indicators for the stock are Bearish and S&P gives TEVA a positive 4 STARS (out of 5) buy rating. For a hedged play on this stock, look at the Jun '11 $52.50 covered call for a net debit in the $48.80 area. That is also the break-even stock price for this trade. This covered call has a duration of 110 days, provides 3.29% downside protection and an assigned return rate of 7.58% for an annualized return rate of 25.16% (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 TEVA Jan '12 $37.50 call and selling the Jun '11 $52.50 call for a total debit of $11.94. The trade has a lifespan of 110 days and would provide 2.02% downside protection and an assigned return rate of 25.63% for an annualized return rate of 85% (for comparison purposes only). Teva Pharmaceutical has a current annual dividend yield of 1.70%.