International Game Technology (IGT) Trading Just Above Its Support Level

Posted: Tuesday, November 17, 2009 8:57 AM EDT

International Game Technology (NYSE: IGT) closed yesterday at $20.78. So far the stock has hit a 52-week low of $6.81 and 52-week high of $23.30. International Game Technology stock has been showing support around 20.45 and resistance in the 21.17 range. Technical indicators for the stock are Bullish and S&P gives IGT a neutral 3 STAR (out of 5) hold rating. IGT appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at an Apr '10 19 covered call (IGT DS) for a net debit in the $17.68 area. That is also the break even stock price for this trade. This covered call has a 151 day duration, provides 14.92% downside protection and a 7.47% assigned return rate for an 18.05% 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 IGT Jan '11 10 Call (VGG AB) and selling the Apr '10 19 call (IGT DS) for a $7.85 debit. The trade has a 151 day life and would provide 14.10% downside protection and a 14.65% assigned return rate for a 35.00% annualized return rate (for comparison purposes only). International Game Technology has a current annual dividend yield of 1.20%. [ATU-Seven Summits Research]

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