Entergy (ETR) 11/10/09 PriceWatch Alert Support Down To $76.10

Posted: Tuesday, November 10, 2009 8:11 AM EDT

Entergy (NYSE: ETR) closed yesterday at $77.58. So far the stock has hit a 52-week low of $59.87 and 52-week high of $87.58. Entergy stock has been showing support around 76.10 and resistance in the 78.32 range. Technical indicators for the stock are Bearish and S&P gives ETR a positive 4 STAR (out of 5) buy rating. ETR appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Jan '10 80 covered call (ETR AP) for a net debit in the $75.83 area. That is also the break even stock price for this trade. This covered call has a 67 day duration, provides 2.26% downside protection and a 5.50% assigned return rate for a 29.96% 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 ETR Jan '11 60 Call (ODF AL) and selling the Jan '10 80 call (ETR AP) for a $16.85 debit. The trade has a 67 day life and would provide 0.94% downside protection and an 18.69% assigned return rate for a 102.00% annualized return rate (for comparison purposes only). Entergy has a current annual dividend yield of 3.86%. [ATU-Seven Summits Research]

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