Starwood Hotels and Resorts (HOT) 2/9/10 PriceWatch Alert Support Down To $35.56

Posted: Tuesday, February 09, 2010 8:44 AM EDT

Starwood Hotels and Resorts (NYSE: HOT) closed yesterday at $36.43. So far the stock has hit a 52-week low of $8.99 and 52-week high of $39.73. Starwood Hotels stock has been showing support around 35.56 and resistance in the 37.80 range. Technical indicators for the stock are Bullish and S&P gives HOT a weak 2 STAR (out of 5) sell rating. HOT appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a May '10 36 covered call for a net debit in the $33.13 area. That is also the break even stock price for this trade. This covered call has a 102 day duration, provides 9.06% downside protection and an 8.66% assigned return rate for a 31.00% 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 HOT Jan '11 17.50 Call and selling the May '10 36 call for a $16.90 debit. The trade has a 102 day life and would provide 5.57% downside protection and a 9.47% assigned return rate for a 34.00% annualized return rate (for comparison purposes only). Starwood Hotels has a current annual dividend yield of 0.57%. [ATU-Seven Summits Research]

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