Lennar (LEN) Trading In Wide Support/Resistance Range

Posted: Tuesday, February 09, 2010 9:00 AM EDT
By: Market Intelligence Center Staff

Lennar (NYSE: LEN) ended the last trading session at $14.71. So far the stock has hit a 52-week low of $5.54 and 52-week high of $17.66. Lennar stock has been showing support around 13.56 and resistance in the 16.02 range. Technical indicators for the stock are Neutral and S&P gives LEN a very positive 5 STAR (out of 5) strong buy rating. LEN appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at an Aug '10 13 covered call for a net debit in the $11.61 area. That is also the break even stock price for this trade. This covered call has a 194 day duration, provides 21.07% downside protection and an 11.97% assigned return rate for a 22.53% 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 LEN Jan '11 7.50 Call and selling the Aug '10 13 call for a $4.55 debit. The trade has a 194 day life and would provide 18.08% downside protection and a 20.88% assigned return rate for a 39.00% annualized return rate (for comparison purposes only). Lennar has a current annual dividend yield of 0.98%. [ABR-Seven Summits Research]