WellPoint Health Networks (WLP) Showing Neutral Technicals With Support at 58.93

Posted: Tuesday, February 09, 2010 8:58 AM EDT
By: Market Intelligence Center Staff

WellPoint Health Networks (NYSE: WLP) ended the last trading session at $61.69. So far the stock has hit a 52-week low of $29.32 and 52-week high of $70.00. WellPoint Health Networks stock has been showing support around 58.93 and resistance in the 64.45 range. Technical indicators for the stock are Neutral and S&P gives WLP a positive 4 STAR (out of 5) buy rating. WLP appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jun '10 62.50 covered call for a net debit in the $56.79 area. That is also the break even stock price for this trade. This covered call has a 131 day duration, provides 7.94% downside protection and a 10.05% assigned return rate for a 28.01% 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 WLP Jan '11 40 Call and selling the Jun '10 62.50 call for an $18.45 debit. The trade has a 131 day life and would provide 5.25% downside protection and a 21.95% assigned return rate for a 61.00% annualized return rate (for comparison purposes only). WellPoint Health Networks does not pay dividends at this time. [ABR-Seven Summits Research]