Newmont Mining Corp (NYSE: NEM) closed Thursday’s trading session at $55.37. In the past year, the stock has hit a 52-week low of $42.80 and 52-week high of $65.50. Newmont Mining stock has been showing support around $53.89 and resistance in the $57.69 range. Technical indicators for the stock are Bearish and S&P gives NEM a positive 4 STARS (out of 5) buy rating. For a hedged play on this stock, look at the Mar ’11 $55.00 covered call for a net debit in the $52.75 area. That is also the break-even stock price for this trade. This covered call has a duration of 50 days, provides 4.73% downside protection and an assigned return rate of 4.27% for an annualized return rate of 31.14% (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 NEM Jan ’12 $30.00 call and selling the Mar ’11 $55.00 call for a total debit of $23.18. The trade has a lifespan of 50 days and would provide 3.96% downside protection and an assigned return rate of 7.85% for an annualized return rate of 57% (for comparison purposes only). Newmont Mining has a current annual dividend yield of 1.07%. [ABR-Seven Summits Research]


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