Kraft Foods (KFT) 9/7/10 PriceWatch Alert Down To $29.15 Break Even

Posted: Monday, September 06, 2010 8:27 AM EDT
By: Market Intelligence Center Staff

Kraft Foods (NYSE: KFT) ended the last trading session at $30.58. So far the stock has hit a 52-week low of $25.72 and 52-week high of $31.09. Kraft Foods stock has been showing support around 30.19 and resistance in the 30.87 range. Technical indicators for the stock are Bullish and S&P gives KFT a neutral 3 STAR (out of 5) hold rating. KFT appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Dec '10 30 covered call for a net debit in the $29.15 area. That is also the break even stock price for this trade. This covered call has a 102 day duration, provides 4.68% downside protection and a 2.92% assigned return rate for a 10.43% 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 KFT Jan '12 22.50 Call and selling the Dec '10 30 call for a $6.87 debit. The trade has a 102 day life and would provide 3.96% downside protection and a 9.17% assigned return rate for a 33.00% annualized return rate (for comparison purposes only). Kraft Foods has a current annual dividend yield of 3.82%. [ATU-Seven Summits Research]