Century Aluminum (NASDAQ:CENX) closed Wednesday's seesaw trading session at $14.30. In the past year, the stock has hit a 52-week low of $8.25 and 52-week high of $20.76. Century Aluminum stock has been showing support around $13.89 and resistance in the $14.97 range. Technical indicators for the stock are Bearish. For a hedged play on this stock, look at the Jan '12 $12.50 covered call for a net debit in the $11.15 area. That is also the break-even stock price for this trade. This covered call has a duration of 226 days, provides 22.03% downside protection and an assigned return rate of 12.11% for an annualized return rate of 19.55% (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 $10.00 call and selling the Jan '12 $12.50 call for a total debit of $1.85. The trade has a lifespan of 226 days and would provide 17.13% downside protection and an assigned return rate of 35.14% for an annualized return rate of 57% (for comparison purposes only). Century Aluminum does not pay dividends at this time.
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