A T and T (T) 2/9/10 PriceWatch Alert Up To 7.69% Downside Protection

Posted: Tuesday, February 09, 2010 8:43 AM EDT
By: Market Intelligence Center Staff

A T and T (NYSE: T) closed yesterday at $24.98. So far the stock has hit a 52-week low of $21.44 and 52-week high of $28.73. A T and T stock has been showing support around 24.76 and resistance in the 25.38 range. Technical indicators for the stock are Bearish and S&P gives T a very positive 5 STAR (out of 5) strong buy rating. T appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Jul '10 24 covered call for a net debit in the $23.06 area. That is also the break even stock price for this trade. This covered call has a 158 day duration, provides 7.69% downside protection and a 4.08% assigned return rate for a 9.42% 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 T Jan '11 20 Call and selling the Jul '10 24 call for a $3.43 debit. The trade has a 158 day life and would provide 6.20% downside protection and a 16.62% assigned return rate for a 38.00% annualized return rate (for comparison purposes only). A T and T has a current annual dividend yield of 6.71%. [ATU-Seven Summits Research]