Goldman Sachs (GS) 12/4/09 PriceWatch Alert Technicals Showing Bearish

Posted: Friday, December 04, 2009 8:06 AM EDT
By: Market Intelligence Center Staff

Goldman Sachs (NYSE: GS) closed yesterday at $164.30. So far the stock has hit a 52-week low of $59.13 and 52-week high of $193.60. Goldman Sachs stock has been showing support around 160.58 and resistance in the 171.02 range. Technical indicators for the stock are Bearish and S&P gives GS a positive 4 STAR (out of 5) buy rating. GS appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at an Apr '10 160 covered call (GPY DL) for a net debit in the $148.20 area. That is also the break even stock price for this trade. This covered call has a 134 day duration, provides 9.80% downside protection and a 7.96% assigned return rate for a 21.69% 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 GS Jan '11 100 Call (XYF AT) and selling the Apr '10 160 call (GPY DL) for a $52.70 debit. The trade has a 134 day life and would provide 7.06% downside protection and a 13.85% assigned return rate for a 38.00% annualized return rate (for comparison purposes only). Goldman Sachs has a current annual dividend yield of 0.84%. [FBB-Seven Summits Research]