ACE Limited (ACE) Traded 1.8% Higher Yesterday And Closed The Day Just Under Resistance

ACE Limited (NYSE: ACE) closed yesterday at $54.73. So far the stock has hit a 52-week low of $30.92 and 52-week high of $59.36. ACE stock has been showing support around 53.51 and resistance in the 55.41 range. Technical indicators for the stock are Bullish and S&P gives ACE a positive 4 STAR (out of 5) buy rating. ACE appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jan '10 55 covered call (ACE AK) for a net debit in the $51.88 area. That is also the break even stock price for this trade. This covered call has a 93 day duration, provides 5.21% downside protection and a 6.01% assigned return rate for a 23.60% 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 ACE Jan '11 30 Call (VQZ AF) and selling the Jan '10 55 call (ACE AK) for a $22.05 debit. The trade has a 93 day life and would provide 4.90% downside protection and a 13.38% assigned return rate for a 53.00% annualized return rate (for comparison purposes only). ACE has a current annual dividend yield of 2.29%.

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