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Covered Call Write on Agilent Technologies (A)

Below is the option strategy for a covered write on Agilent Technologies (A).  This will produce monthly investment income over a 30 day time period.


Look at the December 2011 39 covered call.  For each 100 shares of Agilent Technologies (A) stock you buy, sell one December 2011 39 covered call option for a 37.65 (39.85 – 2.20) debit or better.  That’s potentially a 3.6% assigned return in 30 days or comparable to a 43.8% annualized return.


The technicals for A are bullish with a weak upward trend. The stock is under accumulation with support at 37.03. S&P rates this stock 4 STARS (out of five) – buy.


For investors seeking more downside protection, buy the May 2012 37 PUT for $4.50.  Sell the put when you exit the covered call trade.  The PUT protection is optional and not required to place the covered call trade.

S&P maintains buy opinion on shares of Agilent (A).  Oct-Q adjusted EPS of $0.84 vs. $0.65 is $0.04 ahead of our estimate.  Sales rose 10%, slightly below our 11% forecast.  Electronic measurement gained 12%, Chemical Analysis increased 4%, and Life Sciences grew 9%.  We are encouraged by the solid growth in Life Sciences, but see continued uncertainty in the U.S. government and academic end-markets. Agilent (A) indicated surprisingly stable and improving European academic markets.  The company guides FY 12 (Oct.) sales of $6.85B-$7.15B and EPS of $3.00-$3.35, in line with our estimates.  We keep our 12-month target price at $48.
Covered call write on Agilient Tecnology

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