Walt Disney (DIS) 11/23/09 PriceWatch Alert At $28.36 Break Even

Posted: Monday, November 23, 2009 8:34 AM EDT

Walt Disney (NYSE: DIS) closed yesterday at $30.01. So far the stock has hit a 52-week low of $15.14 and 52-week high of $30.93. Walt Disney stock has been showing support around 29.64 and resistance in the 30.44 range. Technical indicators for the stock are Bullish and S&P gives DIS a positive 4 STAR (out of 5) buy rating. DIS appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at an Apr '10 31 covered call (DQD DE) for a net debit in the $28.36 area. That is also the break even stock price for this trade. This covered call has a 145 day duration, provides 5.50% downside protection and a 9.31% assigned return rate for a 23.43% 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 DIS Jan '11 20 Call (VDS AD) and selling the Apr '10 31 call (DQD DE) for a $9.15 debit. The trade has a 145 day life and would provide 2.87% downside protection and a 20.22% assigned return rate for a 51.00% annualized return rate (for comparison purposes only). Walt Disney has a current annual dividend yield of 1.14%. [ABR-Seven Summits Research]

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