Potential Aluminum Corporation of China (ACH) Trade Has 7.69% Downside Protection

Aluminum Corp of China (NYSE: ACH) closed Tuesday's trading session at $23.42. In the past year, the stock has hit a 52-week low of $18.03 and 52-week high of $26.89. Aluminum Corporation of China stock has been showing support around $23.14 and resistance in the $23.56 range. Technical indicators for the stock are . For a hedged play on this stock, look at the Aug '11 $23.00 covered call for a net debit in the $21.62 area. That is also the break-even stock price for this trade. This covered call has a duration of 122 days, provides 7.69% downside protection and an assigned return rate of 6.38% for an annualized return rate of 19.10% (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 ACH Jan '12 $17.50 call and selling the Aug '11 $23.00 call for a total debit of $4.75. The trade has a lifespan of 122 days and would provide 5.00% downside protection and an assigned return rate of 15.79% for an annualized return rate of 47.24% (for comparison purposes only). Aluminum Corporation of China does not pay dividends at this time