CA (CA) Listed On Investors Observer Hedged Dividend Income List

Posted: Tuesday, November 17, 2009 9:03 AM EDT

CA (NasdaqNM: CA) closed yesterday at $22.24. So far the stock has hit a 52-week low of $13.68 and 52-week high of $24.15. CA stock has been showing support around 21.87 and resistance in the 22.59 range. Technical indicators for the stock are Bullish and S&P gives CA a neutral 3 STAR (out of 5) hold rating. CA appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a May '10 20 covered call (CA ED) for a net debit in the $18.84 area. That is also the break even stock price for this trade. This covered call has an 186 day duration, provides 15.29% downside protection and a 6.16% assigned return rate for a 12.08% 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 CA Jan '11 12.50 Call (VCA AV) and selling the May '10 20 call (CA ED) for a $7.00 debit. The trade has an 186 day life and would provide 12.32% downside protection and a 7.14% assigned return rate for a 14.00% annualized return rate (for comparison purposes only). CA has a current annual dividend yield of 0.73%. [ATU-Seven Summits Research]

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