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. 

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