CBS (CBS) Could Break Through Technical Resistance Levels Today

Posted: Friday, February 05, 2010 9:10 AM EDT
By: Market Intelligence Center Staff

CBS (NYSE: CBS) closed yesterday at $13.75. So far the stock has hit a 52-week low of $3.06 and 52-week high of $14.56. CBS stock has been showing support around 13.07 and resistance in the 14.19 range. Technical indicators for the stock are Bullish and S&P gives CBS a neutral 3 STAR (out of 5) hold rating. CBS appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Jun '10 13 covered call for a net debit in the $12.00 area. That is also the break even stock price for this trade. This covered call has a 135 day duration, provides 12.73% downside protection and an 8.33% assigned return rate for a 22.53% 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 CBS Jan '11 7.50 Call and selling the Jun '10 13 call for a $4.80 debit. The trade has a 135 day life and would provide 10.55% downside protection and a 14.58% assigned return rate for a 39.00% annualized return rate (for comparison purposes only). CBS has a current annual dividend yield of 1.50%. [THA-Seven Summits Research]