ASX 200 short term direction, ANZ, CSL and RIO

by Raymond Chan

In my interview at Sky News Business Channel yesterday, I've been asked to comment on short term direction of ASX 200 .... Technically speaking, the Australia S&P/ASX 200 (XJO) and the major US indexes are in overbought territory, which suggests that a short-term pull back to unwind the overbought conditions is likely. We believe that the pull back would be shallow and will present a good buying opportunity. The medium term outlook for global equity markets remains bullish and we favour a 4th quarter rally.
 
 
From our Option Team
 
Position One:                            Sell ANZ November $26 calls at 20 cents
Current Share Price:                 $25.71
Research Target Price:  $24.01
 
ANZ will report this Thursday -  25 October 2012. Having seen recent weakness in the Bank of Qld result and after NAB last week announcing a "$250m economic cycle provision" there may be negative implications for the other Australian banks.  Please note this position will need to be monitored prior to the ex-dividend date in November.
 
 
Position Two:                           Sell CSL November $48 calls at 50 cents
Current Share Price:                 $46.64
Research Target Price:  $41.11
 
The CSL share price has enjoyed a strong run from $30 in the last year, it now trades on an FY13 P/E of 21.3 times, this covered call is suggested for those who own shares as a means of increasing the income from the shares.
 
 
Position Three:              Sell RIO November $58 Puts at 165 cents
Current Share Price:                 $57.82
Research Target Price:  $95.78
 
The iron ore spot price has recovered from below $90 in early September to the current level of $119. The RIO share price has underperformed in comparison to the iron ore price recovery. 

This email is made without consideration of any specific client’s investment objectives, financial situation or needs. Those acting upon such information without first consulting one of RBS Morgans investment advisers do so entirely at their own risk. It is recommended that any persons who wish to act upon this report consult with an RBS Morgans investment adviser before doing so. This email does not constitute an offer or invitation to purchase/sell any securities and should not be relied upon in connection with any contract or commitment whatsoever.
 
 

Disclaimer

Information/strategies/trading ideas in this blog is provided for general information purposes only and is not intended as an offer to enter into any transaction. Information contained in this blog is not necessarily complete and its accuracy cannot be guaranteed. Information/strategies/trading ideas here have been prepared without consideration of the investment objectives, financial situation or particular needs of any individual investor. Before a client/investor/reader makes an investment decision, a client/investor/reader should, with or without RBS Morgans' or the author’s assistance, consider whether any advice contained in this blog is appropriate in light of their particular investment needs, objectives and financial circumstances. It is unreasonable to rely on any recommendation without first having spoken to your adviser for a personal recommendation. The use of options may not be suitable for all investors. Potential investors are recommended to seek professional advice before embarking on any strategies mentioned in this blog. The information/strategies/trading ideas contained in this blog have been taken from sources believed to be reliable. Neither the author nor RBS Morgans Limited represent that the information is accurate or complete nor should it be relied upon as such. Any opinions expressed reflect the author’s judgment at this date and are subject to change and is not necessarily that of RBS Morgans'. RBS Morgans and/or its affiliated companies may make markets in the securities discussed. Further, RBS Morgans and/or its affiliated companies and/or their employees from time to time may hold shares, options, rights and/or warrants on any issue included in this blog and may, as principal or agent, sell such securities. The Directors of RBS Morgans Limited and Grosvenor Sydney office advise that they and persons associated with them may have an interest in the above securities and that they may earn brokerage, commissions, fees and other benefits and advantages, whether pecuniary or not and whether direct or indirect, in connection with the making of a recommendation or a dealing by a client/investor/reader in these securities, and which may reasonably be expected to be capable of having an influence in the making of any recommendation, and that some or all of our representatives may be remunerated wholly or partly by way of commission. Information in this blog is proprietary to its author and may not be copied as your own or used for any other purpose without the prior written consent of the author. RBS Morgans Limited (ABN 49 010 669 726 AFSL 235410) A Participant of ASX Group Principal Office: Level 29, Riverside Centre, 123 Eagle Street, Brisbane QLD 4000
 

Subscribe to our Daily Newsletter?

Would you like to receive our daily news to your inbox?