JC Penney (JCP) 2/9/10 PriceWatch Alert With Support Around $23.65

Posted: Tuesday, February 09, 2010 8:28 AM EDT
By: Market Intelligence Center Staff

JC Penney (NYSE: JCP) closed yesterday at $24.30. So far the stock has hit a 52-week low of $13.71 and 52-week high of $37.21. JC Penney stock has been showing support around 23.65 and resistance in the 25.11 range. Technical indicators for the stock are Bearish and S&P gives JCP a positive 4 STAR (out of 5) buy rating. JCP appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at an Aug '10 24 covered call for a net debit in the $21.65 area. That is also the break even stock price for this trade. This covered call has a 193 day duration, provides 10.91% downside protection and a 10.85% assigned return rate for a 20.53% 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 JCP Jan '11 17.50 Call and selling the Aug '10 24 call for a $5.00 debit. The trade has a 193 day life and would provide 7.41% downside protection and a 30.00% assigned return rate for a 57.00% annualized return rate (for comparison purposes only). JC Penney has a current annual dividend yield of 3.18%. [ATU-Seven Summits Research]