Dominion Resources (D) 2/9/10 PriceWatch Alert Technicals Showing Bearish

Posted: Tuesday, February 09, 2010 8:33 AM EDT
By: Market Intelligence Center Staff

Dominion Resources (NYSE: D) closed yesterday at $36.27. So far the stock has hit a 52-week low of $27.15 and 52-week high of $39.79. Dominion Resources stock has been showing support around 35.94 and resistance in the 36.92 range. Technical indicators for the stock are Bearish and S&P gives D a positive 4 STAR (out of 5) buy rating. D appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Jul '10 35 covered call for a net debit in the $34.02 area. That is also the break even stock price for this trade. This covered call has a 158 day duration, provides 6.20% downside protection and a 2.88% assigned return rate for a 6.65% 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 D Jan '11 30 Call and selling the Jul '10 35 call for a $4.35 debit. The trade has a 158 day life and would provide 5.29% downside protection and a 14.94% assigned return rate for a 35.00% annualized return rate (for comparison purposes only). Dominion Resources has a current annual dividend yield of 4.75%. [ATU-Seven Summits Research]