Lincoln National (LNC) 2/9/10 PriceWatch Alert Could Hit 22.98% Return

Posted: Tuesday, February 09, 2010 8:15 AM EDT
By: Market Intelligence Center Staff

Lincoln National (NYSE: LNC) closed yesterday at $23.50. So far the stock has hit a 52-week low of $4.90 and 52-week high of $28.44. Lincoln National stock has been showing support around 22.65 and resistance in the 24.95 range. Technical indicators for the stock are Bearish and S&P gives LNC a positive 4 STAR (out of 5) buy rating. LNC appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jul '10 21 covered call for a net debit in the $19.10 area. That is also the break even stock price for this trade. This covered call has a 158 day duration, provides 18.72% downside protection and a 9.95% assigned return rate for a 22.98% 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 LNC Jan '11 12.50 Call and selling the Jul '10 21 call for a $7.60 debit. The trade has a 158 day life and would provide 14.47% downside protection and an 11.84% assigned return rate for a 27.00% annualized return rate (for comparison purposes only). Lincoln National has a current annual dividend yield of 0.17%. [ATU-Seven Summits Research]