Goldman Sachs (GS) 12/31/09 PriceWatch Alert Targets 28.88% Return

Posted: Thursday, December 31, 2009 8:28 AM EDT
By: Market Intelligence Center Staff

Goldman Sachs (NYSE: GS) closed yesterday at $166.70. 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 162.30 and resistance in the 169.48 range. Technical indicators for the stock are Bearish and S&P gives GS a very positive 5 STAR (out of 5) strong buy rating. GS appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Feb '10 165 covered call for a net debit in the $158.60 area. That is also the break even stock price for this trade. This covered call has a 51 day duration, provides 4.86% downside protection and a 4.04% assigned return rate for a 28.88% 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 90 Call and selling the Feb '10 165 call for a $69.95 debit. The trade has a 51 day life and would provide 4.05% downside protection and a 7.22% assigned return rate for a 52.00% annualized return rate (for comparison purposes only). Goldman Sachs has a current annual dividend yield of 0.85%. [THA-Seven Summits Research]